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India and Japan on Monday decided to introduce separate dialogues between their Defence and Foreign Ministers and concluded a 75-billion dollar bilateral currency swap agreement which is aimed at giving greater stability to the Indian Rupee and capital markets in India.
The decisions, taken at a meeting between Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe in Tokyo, are expected to give greater political weight to the defence and surging economic cooperation between the two countries.
Japan is the second country after the US with which India will have dialogue between Defence and Foreign Ministers. India and Japan had the Secretary-level dialogue on defence and foreign affairs issues.
With greater strategic convergence in focus, the two sides also decided to start negotiations on the crucial Acquisition and Cross-Servicing Agreement (ACSA) which will enhance the depth of bilateral security and defence cooperation. Once concluded, it will give the two defence forces access to each other’s military bases for logistical support, like the one India has with the US.
Given a militarily assertive China in the Indian Ocean and Pacific Ocean regions, India and Japan also decided to deepen their “maritime domain awareness” and a pace was signed between Indian Navy and Japanese maritime self-defence force.
They also signed a pact on a fresh loan in Japanese currency Yen on the Mumbai-Ahmedabad High bullet train project. Japan is providing 80 per cent fund of the project through a soft loan of Rs 79,000 crore at an interest rate of 0.1 per cent with a repayment extending over 50 years and a moratorium period of 15 years.
To enhance financial and economic cooperation, the two governments signed an agreement to conclude a Bilateral Swap Arrangement worth USD 75 billion in a move that is expected to help India in the face of a steep fall in the value of its currency Rupee against the US Dollar in recent months.
The declining value of Rupee and global trade friction have prompted foreign portfolio investors to withdraw an estimated Rs 35,000 crore worth of investment from Indian capital markets. It would help India contain its current account deficit—the difference between earnings through exports and expenditure for imports—which could rise to 2.8 per cent of the GDP.
Under the currency swap agreement, India and Japan can acquire US Dollars from each other in return for their national currencies if and when needed and will help meet short-term cash shortfalls.
The Indian Finance Ministry termed the currency swap agreement as the “high-point” of Modi’s visit to Japan and said this agreement would be 50 per cent higher that the previous such deal signed in 2014 which was in force till December 2015.
After the bilateral meeting with Abe, Modi said “21st century will be Asia’s century and Indo-Japan ties will play a key role in shaping it.” For his part, Abe
said “the new era of India Japan relations will be strengthened by the 2+2 dialogue. And to strengthen our defence cooperation, we will start discussions on the ACSA.”
A joint statement said Modi and Abe shared their view that in order to achieve this shared vision, India and Japan must endeavour to work together for a rules-based and inclusive world order that fosters trust and confidence by enhancing communication and connectivity to ensure rule of law, unimpeded trade and flow of people, technology and ideas for shared prosperity.
“The two leaders also affirmed that ASEAN unity and centrality are at the heart of the Indo-Pacific concept which is inclusive and open to all. They shared a willingness to expand concrete cooperation with the U.S. and other partners.
“The two leaders’ vision for the Indo-Pacific is based on a rules-based order that respects sovereignty and territorial integrity of nations, ensures freedom of navigation and overflight as well as unimpeded lawful commerce and seeks peaceful resolution of disputes with full respect for legal and diplomatic processes in accordance with the universally recognised principles of international law,” the joint statement said without naming China which has territorial issues with a number of ASEAN countries like Vietnam, the Philippines and Singapore.
Modi and Abe denounced the growing threat of terrorism. Like in 2017, they called on Pakistan to bring to justice the perpetrators of terrorist attacks, including those of November 2008 in Mumbai and January 2016 on an Indian air base in Punjab.

New Delhi Correspondent