Also on the table during Abe's three-day visit will be an investment fund to help technology cooperation and joint ventures. (Agencies)
The two prime ministers will discuss financing and building of a network of roads and ports linking South Asia with the Association of Southeast Asian Nations (ASEAN), which is forming an economic community by 2015. The network will have two components - an East-West corridor linking India with Bangladesh, Myanmar and Thailand and a North-South corridor running through Bhutan and Nepal to south India. The Japanese government will provide yen loans for the projects.
The Japanese prime minister has been cited for his "Abenomics" model, which mixes fiscal stimulus, monetary stimulus and corporate reform that pulled Japan out of deflation and led to a rise in growth last year. He is also reforming Japan's national security institutions, seeking greater alignment with other maritime democracies like India to balance a rising China.
Simultaneously, Abe has been looking to relax the ban on arms exports and forging international defence industrial cooperation.
Creaking and underdeveloped infrastructure have been a hindrance to growth and trade barrier for India. During the ASEAN Summit in Brunei last October, Japan had vowed to support India's development by meeting its infrastructure needs.
Also, there is a strategic objective behind the corridor plan as the rise of China has become a constant variable in the bilateral relation and geopolitics of the Indo-Pacific region. Abe's visit is taking place at a time when questions over the sustainability of US "rebalancing" towards Asia is growing due to fiscal constraints and domestic politics.
Diplomatic observers see the corridor project as Abe's answer to Chinese-led projects to link southern China with South Asia by road and rail.
"The dividends of growth in Asia must not be wasted on military expansion. We must use it to invest in innovation and human capital which will further boost growth in the region," Abe told government, business and civil-society leaders at the ongoing World Economic Forum in Davos, alluding to China's growing military build-up.
Experts say the Japanese interest in the corridor lies in the fact that it would improve supply chains of companies and facilitate trade.
Abe, who will be the chief guest at the Republic Day parade in New Delhi, is being accompanied by a large number of Japanese businessmen.
Japanese media reports said the Abe administration is looking to set up a joint investment fund with India to help finance Japanese companies with operations in India such as autoparts makers, consumer product manufacturers and semiconductor firms. It will also support Indian firms in technological cooperation with Japanese companies and joint ventures.
According to a Nikkei report, the fund would manage around 30-40 billion yen (USD 287-USD 383 million).
Both Indian and Japanese officials said Abe's trip had been designed to reinforce and reinvigorate bilateral relations in a wide range of fields as well as their strategic global partnership, that include ensuring maritime security in the Indian Ocean.
"We must lay down rules that promote actions based on the international law of the sea, only then, I believe, can we achieve growth and prosperity in Asia, where all of us can realize our great potential," said Abe at Davos.
Japan maintains its naval presence in the Indian Ocean and India is bolstering its engagement in the western Pacific. Last month, the two countries held a joint exercise in the Bay of Bengal. For the first time in 2012, both held joint exercises in the north Pacific.
Japan wants to strengthen defence planning with India. As part of the plan, Japanese media reports also said Tokyo will assign two more defence attaches, representing the Maritime and Air Self-Defence Forces (SDF), by next year at its embassy in India. There is now one attache from the Ground SDF at the embassy.
India thus will be the fifth country where Japan will have attaches from the three wings of the SDF after US, China, South Korea and Russia.
Also on the table during Abe's three-day visit will be an investment fund to help technology cooperation and joint ventures.