However, the mixed signals being sent out by the BJP-led government on policy matters could affect the flow of Japanese investments to India in the medium term, the ambassador noted.

Addressing a meeting organised here by the Federation of Indian Chamber of Commerce and Industry (Ficci) here, Hirabayasi said the nuclear tests by India have cast a negative shadow on the investment climate. The ambassador felt that the security environment in the country has deteriorated post-test contrary to the perception that the situation had improved.

The swadeshi rhetoric, the boycott of foreign goods like the Coca-Cola and Pepsi coupled with the special additional customs duty would also serve todiscourage investments into the country. On the span of the sanctions, Hirabayasi said, he suspected that ``the clouds may not clear soon''. ``We feel that the Indian government is maintaining a rigid stance, making it uncertain when the sanction by various countries could be lifted.''

He stated that Japan had imposed the ``economic measures'' in an expression of the dismay, disappointment, outrage and anger of the Japanese people over the nuclear tests. It was not imposed in order to penalise India, he added.

The Japanese ambassador clarified that his country had suspended grant assistance and yen loan only for new projects and that ongoing projects would not be affected by this decision. Japan has also decided to closely examine the loans extended by international financial institutions.

Hirabayashi added that Japan would continue to provide the emergency and humanitarian aid as well as grass root assistance. It will also not affect the technical cooperation between the two countries. The tradeinsurance administered by the Ministry of Investment Trade and Industry is also not in the scope of the measures. "These measures do not represent anything more or anything less than that."

'Defending the measures, Hirabayashi said, Japan has imposed similar measures on China when it tested nuclear devices. At that time, Japan was the only country to announce such measures, the ambassador pointed out. The sanctions were lifted only after China stopped testing.

Besides the country was also bound by the charter of the Overseas Development Assistance charter to impose the measures.

The ambassador felt that the India had triggered off a chain reaction of nuclear proliferation by conducting the tests. he added that he understood the extent of India's concern on security environment around it. ``However, it does not justify India to go nuclear.''

Hirabayasi hoped that India would not go ahead with weaponisation of the nuclear devices and developing the delivery systems but would instead move ahead frommoratorium to signing the Comprehensive Test Ban Treaty and Nuclear Non-Proliferation Treaty.

He further stated that the two country should set aside politics and work towards promoting trade and investment.