Tokyo: Japan and India agreed on Wednesday to carry out a joint feasibility study on India's first high-speed railway, a move which could make Japanese bullet train technology the favourite for any contract.
Prime Minister Shinzo Abe and his Indian counterpart Manmohan Singh said the two countries would split the cost of the study into a link between Mumbai and Ahmedabad.
"Prime Minister Singh noted Japan's interest in supporting the introduction of high-speed railway system in India," said a joint statement after a summit.
"Prime Minister Singh appreciated Japan's high level of expertise in designing and implementing High-Speed Railway (Shinkansen) systems.
"The two Prime Ministers decided that the two sides will co-finance a joint feasibility study of High-Speed Railway system on the Mumbai-Ahmedabad route."
An earlier report in the Nikkei business daily said Abe would offer a sweetener in the form of 101.7 billion yen ($1.0 billion) in yen-based loans to India, as Tokyo fights off competition from nations such as France and its TGV high-speed rail network.
That cash came in the form of a 71 billion yen loan for the construction of the Mumbai Metro, and almost 31 billion yen for two other projects.
The Nikkei said the agreement on a joint study indicated that Japanese technology was likely to get the nod for any future Indian purchase of a high-speed system.
Japan under Abe is embarking on a renewed drive to sell roads, rail and power stations to emerging nations including India, in a bid to offset lassitude in the domestic economy.
Earlier this month Abe pledged he would travel the world on behalf of Japan Inc. and said he wanted to treble sales of Japan's well-respected infrastructure projects to 30 trillion yen a year.
The Mumbai-Ahmedabad rail line would stretch 500 kilometres (312 miles) and cost up to one trillion yen, the Nikkei said, adding the two governments plan to finish technological reviews and costings by March 2014.
The joint statement welcomed the completion of a preliminary study on a masterplan for infrastructure in southern India, and said the two sides would now work on fleshing out plans.
Japanese media said their country could help build a power grid, roads, railways and ports.
The quickening pace of commercial co-operation comes with the two countries -- both democracies -- eyeing the rise of China with increasing unease, as Beijing presses territorial claims with growing insistence.
Mr Singh on Wednesday called for the strengthening of security ties, describing the two nations as "natural and indispensable partners".
"We should intensify our political dialogue and expand our strategic consultations on... issues of mutual interest," he said in a speech earlier on his four-day trip, adding that defence and security dialogue, military exercises and defence technology collaboration should also increase.
The prime ministers agreed to establish a working group to examine an Indian purchase of amphibious planes, in what would be the first sale of hardware used by the Japanese military since a weapons export ban was imposed in the 1960s.