2006 ended with a new beginning in India-Japan relations - a Global and Strategic Partnership between the "the largest and the most developed democracies in Asia" was agreed upon during Indian PM Manmohan Singh's visit to Tokyo from 13 to 16 December. The significance of this mutual confirmation of the need for strategic partnership lies in the fact that India at an eight per cent growth rate is likely to emerge as a world economic power, while Japan is emerging successfully from the longest recession ever witnessed by any country. Both countries share common values of freedom and democracy and a sense of uneasiness, too, over China's intentions in the region.

According to Singh, the Japanese Prime Minister Shinzo Abe had himself stated that the Indo-Japan relationship "will be the most important bilateral relationship (for Japan) in the world." The statement reflects India's importance to Japan. To bring both countries closer, cultural ties, educational linkages and people-to-people contacts will be enhanced in the coming years. The two countries have agreed to initiate talks in January on an economic partnership agreement to promote trade by abolishing or lowering tariffs on each others' exports, and liberalizing trade and services. Other areas where the need to promote cooperation was agreed upon include higher education, and science and technology. It was agreed that henceforth annual summit meetings will take place. and other high level exchanges would become more frequent. This is likely to lead to a stronger and closer political, economic and strategic bilateral relations to serve long-term interests of both countries, enhance all-round cooperation and contribute to greater regional peace and stability. The Partnership will also involve closer political and diplomatic coordination on bilateral, regional, multilateral and global issues, comprehensive economic engagement, stronger defence relations and technological cooperation.

Addressing the Japanese Diet on 14 December, Manmohan Singh stressed the need for more Japanese investment in India indicating disproportionately low levels of investments. The total Japanese bilateral trade with India is one-thirtieth of its trade with China. About 350 Japanese companies operate in India, but their numbers are less than one-fiftieth of those doing business in China. Japan also lags behind other countries, such as the US, China and South Korea in capitalizing on India's fast expanding domestic market. Both the US and China have doubled their trade with India in the past five years, but Japan's trade with India was one quarter that of the US trade with India in 2005. The Mainichi Shimbun in its editorial (18 December) argued that India and Japan can "develop a mutually beneficial relationship if India's strength in the software industry and Japan's advantage in hardware production can supplement each other."

Based on the recommendations of the India-Japan Joint Study Group to promote economic partnership, the two Prime Ministers have decided to launch immediate negotiations for the conclusion of a bilateral Economic Partnership Agreement/Comprehensive Economic Partnership Agreement (EPA/CEPA). India can further gain enormously by the experiences of Japan particularly in infrastructure development which is mutually agreed upon in the joint statement. The feasibility reports of massive projects like dedicated freight corridor linking Delhi-Mumbai and Kolkata (worth around Rs. 22,000 crore) and Delhi Metro Phase-II are being discussed and work will commence soon. Other significant proposals which can strengthen bilateral relations include setting up of a university at Nalanda and an Indian Institute of Information Technology for Design and Manufacturing at Jabalpur. More Indian States are expected to make twinning arrangements of Sister Province/State relationship as reached between Delhi State and Fukuoka Prefecture and Maharashtra State and Okayama Prefecture to enhance people-to-people contact.

Although, Japan has recognized India as a nuclear power, it has still has not decided whether to support the Indo-US nuclear deal. Japan, like China, is an important member of the 45-member Nuclear Suppliers' Group (NSG). Meanwhile, the growing need for securing sea lanes which are vital for the economy and peace and stability of the region require more cooperation. In this context joint exercises of the navy and coast guards of both countries are steps in the right direction. The formation of India-Japan Joint Working Group on Counter Terrorism to fight global menace of international terrorism is another positive step.

The Japanese media was unanimous in pointing out the significance of the "strategic relationship" with India and took a critical view of the delay in building stronger economic relations between the two countries. Editorials in the Sankei Shimbun, the Yomiuri Shimbun, the Nihon Keizai Shimbun, and the Mainichi Shimbun stressed the need for increasing investment in India. Factors like increasing anti-Chinese feelings, the Japanese government's initiatives to revive the nationalistic feelings among its younger generation, China's growing influence, and the lucrative Indian market may further boost Indo-Japanese relations. Meanwhile, the Japanese media has been watching developments in Sino-Indian relations closely with significant coverage of Chinese President, Hu Jintao's visit to India. With even the US entering into a nuclear agreement with India, the Japanese were of the view that the summit was an opportunity to reconfirm India's importance to Japan.