Japan's planned development aid for India's Andaman and Nicobar Islands carries a "geostrategic overtone," with some security experts saying it is part of initiatives to keep an increasingly assertive China in check.

The 4.02 billion yen ($31 million) in aid comes as Japan and India have been promoting a free and open Indo-Pacific in coordination with the United States and Australia, the four regional democracies collectively known as the Quad.

It marks the first time that India has accepted foreign assistance for development on the islands in the strategically important Bay of Bengal in the Indian Ocean, reflecting deepening ties between New Delhi and Tokyo.

The islets are the only area in India with naval, air and ground forces intended to deter China, a neighbouring giant with which the South Asian country is involved in several territorial disputes.

"If an armed conflict breaks out in the South China Sea, and if the U.S. and by default Japan get involved, the Andaman and Nicobar potentially can play a crucial role," said G.V.C. Naidu, a professor of Indo-Pacific affairs at Jawaharlal Nehru University in New Delhi.

China has overlapping claims with Brunei, Malaysia, the Philippines, Taiwan and Vietnam in the South China Sea, one of the potential flashpoints in the Indo-Pacific.

"The rim region of the Bay of Bengal is also one of the fastest-growing sub regions in the Indo-Pacific," prompting India to pay "a lot more attention," to the maritime sphere and the islands, Naidu said in an email.

The Japan International Cooperation Agency inked the deal with the Indian government on March 30 to "reduce the dependence of the islands on diesel generation systems and utilize the power generated from renewable energy sources."

JICA said storage batteries will be installed by February 2024 in South Andaman to stabilize the power supply, contributing to India's plan to achieve net zero greenhouse gas emissions by 2070.

The aid is also expected to help boost tourism, which is the archipelago's largest industry.

Analysts say that once infrastructure is developed, India and other naval forces could use the facilities to conduct the Malabar exercises in the Indian Ocean involving the four Quad members.

"The development of the islands' infrastructure will facilitate the participation of navies in Malabar, not just Japan's Maritime Self-Defence Force," said Leszek Buszynski, an honorary professor of strategic and defines studies at the Australian National University.

Buszynski said China has criticized the Malabar exercises and Beijing is "sensitive to any expansion of the MSDF's area of operations," particularly in the South China Sea.

Ron Huisken, an adjunct associate professor at ANU's Strategic & Defence Studies Centre, said China's strategic priorities include avoiding the vulnerability of economic or military dependence on access to the Strait of Malacca, close to the Andaman and Nicobar Islands.

Given that most of China's crude oil imports are transported through the strait, Beijing wants to ensure that "no other major power has secure access" to the waterway, Huisken said.

Japan's development aid to the islands comes after Tokyo and New Delhi signed an acquisition and cross-servicing agreement in September 2020, a move some speculate could provide Japanese warships with access to the islands and provide India access to Japan's facilities in Djibouti and elsewhere.

The ACSA enables the Self-Defence Forces and the Indian Armed Forces to provide each other with supplies and services, including food, fuel and spare parts as well as transportation. It also allows use of each side's facilities during joint exercises and U.N. peacekeeping operations.

The Indian Navy has been hosting a multilateral naval exercise at Port Blair, the headquarters of the Andaman and Nicobar Command, which is the only event of its kind in the entire Indo-Pacific.

"Both in scope and degree, these interactions are getting scaled up gradually," making the islands and their development relevant, all the more as the Indian economy expands and its trade grows, according to JNU's Naidu.

"No question, the investment has geostrategic overtone," he said.