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India as an Emerging "Brain Power"

By Masanori Kondo Senior Associate Professor (Development Economics, Indian Economy)International Christian University, Tokyo

2008/05/02

PHOTO:Jansinee Kankaew

A friend of mine who lives in Koto Ward, Tokyo, told me, “We have so many Indians living in our condominium that our notices come with English translations these days.” The number of Indian residents in Japan is now up to 17,500, and over sixty percent of them are IT engineers and their families. Among the Japanese community, they enjoy a favorable reputation as being polite and courteous neighbors.

The Japan-India economic relationship, which had stagnated for a while, is finally infused with new energy. Companies such as Suzuki and Honda that have done well in India are doubling their production capacities, with several more Japanese companies following suit. The trade volume between the two countries has doubled in the past few years, and negotiations being held under the Japan-India Economic Partnership Agreement (EPA) are expected to be completed by the end of this year. From the global perspective, India is expected to play a significant role in the prevention of global warming. In our overall relationship, India is becoming more important for Japan.

In politics, up until a little while ago, there was a trend to attach a strategic importance on India with a view to “contain China.” But the arrival of Prime Minister Yasuo Fukuda brought about a change in Japan’s China policy, resulting in a seemingly more moderate diplomatic approach toward India.

Trying to forge closer ties with India in an effort to balance and contain China was a relationship that was doomed to be short-lived in the first place. Now that the hype has settled and we are actually seeing stronger economic ties emerging between the two countries, this is the right time to objectively reflect upon the relationship between Japan and India. Most important is how to incorporate India’s strength, which is its “human resources,” and make it part of Japan’s future plans, thus building a stronger “people-to-people contact”.

There is a difference between Japan and other developed nations in terms of attitude toward India. Being the largest bilateral donor in India, Japan has always looked upon India as a country with future market potential. On the other hand, the United States and European nations are attracted more by the brains of the Indian people.

These days many American companies have substantial research and development (R&D) activities in India. They are aggressively recruiting the best Indians as part of their global human resource strategy. This trend is backed by the emergence of India-born CEOs in major multinational corporations, including McKinsey, Citigroup, Vodafone and PepsiCo.

How are things in Japan, then? The total value of IT software exported by India to Japan was an insignificant three percent of its total IT exports. Though some Japanese companies hire Chinese employees, there are almost none that hire Indians to work at their company headquarters.

Besides, the number of Indian students in Japan is only five hundred. This is no match for the seventy thousand Chinese students that are in Japan, and it is even less than half the number of students from far smaller countries like Nepal and Sri Lanka. Interchange with Indians living in Japan is also limited.

Traditionally, Indians have always held a good image of Japan. Most of the Indian students who come to study in Japan develop a strong affinity to the country by the time they return home. However, as there are not many successful career patterns for “Japan experts,” Japan has become a less attractive destination for Indians to study. It leads to the vicious cycle of Japanese companies finding it difficult to enter the Indian market with little knowledge of India, and fewer Indians getting hired by Japanese companies. This was what the present Indian Prime Minister, Dr. Manmohan Singh, told me seven years ago, and not much has changed much since then.

Many Japanese companies tend to look upon India much in the same way as they viewed Southeast Asia that brought much success two decades ago. In other words, Japanese companies see India as a source of “labor” rather than “brains.” A former high-ranking Indian official, who is a Japanophile, pointed out: “Whereas Japanese people tend to measure the intellectual level of the people of a nation by per-capita income, Indian elites assess the abilities of their opponents based on their English prowess. And that is what causes a psychological gap between the Japanese and the Indians.”

Since only Japanese people are involved, accumulated information on India tends to become one-sided in Japan. There are plenty of cases where failures and setbacks in business and ODA all get blamed on the catch-all, “It’s the fault of the Indians.” That is quite different from what I heard from a South Korean business organization that has proved successful in India. An official claimed, “In dealing with India, we have nothing to complain about. We simply stick to doing what the Romans do.”

According to Prof. K. Momaya, the Indian Institute of Technology (IIT) in Delhi welcomes some fifty delegations from Japan every year. But alas, there are precious few cases where these visits actually lead to some concrete project getting implemented. Delegations from the United States, Europe and South Korea are much less in number, but they constantly leave their mark and bear fruit in such forms as new labs, joint research and recruitment.

Unfortunately Japan has a reputation across India as a country that keeps on dispatching large delegations with no follow-ups. It has to be reminded that there are two hundred IIT graduates working in Japan. Most of them work for non-Japanese companies, Including the top official of Citibank in Japan. It makes more sense to meet these graduates here in Japan for information exchange before sending fruitless delegations to India.

Japan has had its share of “India booms” in the past, including the time ten years ago when Indian films created a stir in Japan. But all these booms tended to be short-lived. Though fueled by curiosity for the “unknown,” the booms never had the backup of human interchange.

Recently, we have been hearing about projects springing up to promote nascent two-way people-to-people exchanges. When then-Prime Minister Shinzo Abe of Japan visited India last August, there was a meeting for university collaboration, held with vice chancellors/presidents of prominent universities of India and Japan. In September, Namaste India, a festival program to promote Japan-India friendship, was held in Tokyo’s Yoyogi Park, followed by a successful IIT Alumni Conference in Tokyo in November. Fukuoka and Okayama have joined Yokohama in establishing sister city relationships with Indian municipalities. In the corporate sector, a new program to promote internships between Japanese and Indian companies has started. It is most imperative that these movements be brought together so as to create a huge wave that can surge ahead.

Promoting people-to-people exchanges is far healthier than over-strategic approaches toward India to contain China. And the effort is more sustainable. Already India is a nation that wields great power in the world’s IT industry. By 2030, India’s total population is expected to be the world’s largest. Japan must not lead itself down the wrong course.

(Carried by The Asahi Shimbun on March 10, 2008)

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