Japan, facing a rapidly aging society and ever-decreasing birthrate, will seek to tap into the wealth of India's healthcare professionals to help deal with the imminent growing demand for more health service personnel, including nurses and general caregivers, Japanese officials said.

India, with a population of about 1.2 billion people, the second largest after China, is also luring Tokyo due to its potential as a production center with low labor costs and a hefty consumer market and a rapidly growing middle-class.

Japan's 2010 white paper on trade estimated that middle-income households in the South Asian country will increase to 620 million people in 2020 from an estimated 190 million in 2010.

What may at first glance appear to be Tokyo scrambling to get into bed with a rapidly ascending India, is, according to some political commentators a perfectly cogent if not somewhat overdue alliance between two of the top three economic powerhouses in Asia.

Leading economists have always been rather befuddled that despite Japan and India both being major economic engines, the two nations have had limited trade relations.

According to Japan's Foreign Ministry, India accounts for less than 1 percent of Japan's total global trade in value terms. In the first six months of the year this figure stood at a meagre 636 billion yen (7.7 billion U.S. dollars), compared with 176 billion U.S. dollars worth of trade with China during the same period.

"With the current export tariffs set at between 5 and 10 percent it's still relatively expensive for Japanese firms with operations in India for example to source parts or goods that have to be manufactured in Japan," Dr. David Mclellan, a senior professor of Asian Studies at Waseda University, told Xinhua.

"However, the abolition of the tariffs is just a very small part of a much bigger picture. India has long-term ambitions in East Asia and in the coming months we will see Prime Minister Manmohan Singh subtly and skillfully ally his nation with key regional East Asian powers. Singh is an extremely adept diplomat and India has some rather large strategic ambitions," he said.

Rising power

It may come as no surprise that the Japan-India economic pact comes at a time when diplomatic and economic ties have become discernibly strained between Tokyo and Beijing and Singh and Japanese Prime Minister Naoto Kan have wasted no time in discussing the possible exploration of bilateral cooperation on developing rare earth metals, for which Japan has previously relied heavily on China.

Also, India is taking full advantage of the fact that Tokyo is under no illusion about its lack of current trade agreements with its neighbors.

"Tokyo will see this as a good time to strengthen its diplomatic and economic ties with New Delhi as in the area of free trade, Japan falls well behind South Korea for example, they already have a deal with India and globally Japan is struggling in the FTA race," McLellan said.