TOKYO: Japan and India both have much to gain from a visit by Prime Minister Narendra Modi and more than a dozen Indian steel, energy and IT tycoons that begins on Saturday in the ancient capital of Kyoto.

The two countries have complementary economies, given Japan’s wealth and technological prowess and India’s natural resources and drive to modernise its economy.

So far, though, they have failed to capitalise much on those mutual interests. The two countries signed an economic cooperation agreement in 2011 that is gradually dismantling tariffs, but trade between the two — despite gains — remains a tiny fraction of their overall import and export flows.

That’s partly because of India’s restrictive policies toward foreign investment and partly because Japanese companies have been so focused on China.

Analysts expect Modi’s visit with Prime Minister Shinzo Abe to yield some substantial agreements, and possibly a long-awaited deal on cooperation in nuclear power generation technology.

But in the long run, Modi must deliver on promises to improve his country’s investment environment while balancing India’s growing engagement with both Japan and rival China.

“I think there’ll be some very big agreements, on the energy side also, not just nuclear but also renewable energy. India has been lagging on that and needs help from Japan,” said Rajiv Biswas, chief Asia-Pacific economist at IHS Economics.

In the run-up to their meeting, Abe and Modi have been exchanging endearments on Twitter. “I deeply respect his leadership & enjoy a warm relationship with him from previous meetings,” Modi wrote of Abe, adding that he hoped to take to take the relationship “to a new level”.

Published in Dawn, August 30th, 2014