Japanese Prime Minister Shinzo Abe said stronger ties between India and Japan would contribute to "peace and prosperity" in Asia and announced special incentives for Japanese firms to invest in the South Asian country at a business summit in the Indian capital.
"Japan and India are two large democracies in Asia and our relationship is one with the maximum potential in the world. A strong India is good for Japan and a strong Japan is good for India," said Mr Abe, who is here for three days for the annual Japan-India summit.
At yesterday's event organised by the Japan External Trade Organisation in collaboration with Indian business associations, he announced that a "special financial framework" had been created by his government for Japanese firms wanting to invest in India, unlocking 1.5 trillion yen (S$17.3 billion) worth of business opportunities.
A report in the Nikkei said the 1.5 trillion yen loan and investment scheme was for projects like power plants built with Japanese technology.
Ties between India and Japan have been on an upward trajectory, particularly since Prime Minister Narendra Modi came to power last year. He has on more than one occasion expressed admiration for his Japanese counterpart.
For both leaders, pushing economic growth and countering a rising China are on top of their domestic and foreign policy agendas.
Mr Modi yesterday called Mr Abe a "phenomenal leader", tweeting that the visit would "further deepen India-Japan relations". He will hold talks with the Japanese Premier today and also play host to him in his parliamentary constituency of Varanasi, where Mr Abe will witness religious prayers by the River Ganges.
Experts said closer cooperation is an advantage for both countries and that bilateral ties are at an all-time high. For Japan, India represents a major market, while India is looking for Japanese investment in infrastructure.
Professor Prem K. Motwani of Jawaharlal Nehru University said: "I think India and Japan have been politically close since 2004 and ties have improved year on year. Now it is at a peak."
Economic ties, in particular, are expected to get a push during the visit. On the agenda is the finalisation of an agreement for Japan to build India's first 505km high- speed rail link connecting the cities of Ahmedabad and Mumbai.
"If Shinkansen starts plying in India with technology from Japan, distances between cities in this vast country will become shorter, (it will) change flow of people and give rise to newer businesses," said Mr Abe.
Said Ms Vindu Mai Chotani of the Observer Research Foundation: "The Shinkansen move would be one of the biggest FDIs (foreign direct investments) in India."
Defence and security ties between the two sides have also grown stronger against the backdrop of a rising China. In October, India held naval drills with Japan and the US in the Bay of Bengal.
In an article in The Times of India newspaper, Mr Abe wrote about advancing "peace and prosperity in the Indo-Pacific region". "Hand in hand with Prime Minister Narendra Modi I intend to make the 'Confluence of the Two Seas' - the Indian Ocean and Pacific Ocean - open, peaceful and abundant."