Thank you for that honest, objective analysis, @Kaniska .
I think it is now upto the gov to increase this cooperation to another level...And to acheive that we need more people to people cultural interaction and invest in with the people from both nations...
I have some thoughts to improve India Japan engagement:
1- Japan is one of the few country who can easily expand its base and influence without any noise by any political parties of India.
2- Japan needs to think big if it really want an economic counter balance to China. India has resource, man power and potential to be invested with Japan's money and investment in a right way...So Japan should start investing in Infrastructure, Indian education system( Like an investment to get an return) and human capital. Like US and its IT work is benifitted by contribution from Indian companies where both India and US got benifitted, so simillar kind of model needs to be worked out where economically both to be in a win win situation.
3- Japan has scarcity of Land, So India should provide preferential treatment to Japan to attarct more Japan's investment in India...So Japan's gets return on investment and India's gets employment to its people..
These are some of the things that needs to be stepped up very fast in order for India and Japan to really increase their cooperation ...