August , 2017
Strengthening trade ties between India and Japan
14:04 pm

Ayantika Halder

Exchange between Japan and India is perceived to have begun in the 6th century when Buddhism was introduced to Japan. Indian culture, filtered through Buddhism, has had a great impact on Japanese culture and that can be an important contributing factor to the Japanese people’s sense of closeness to India. The trade relations between India and Japan flourished after the establishment of diplomatic ties, especially after World War II.

The present robust economic growth of India has not been missed by the Japanese.  Japan has now established itself as the third-largest FDI facilitator into India.  The President of the Calcutta Chamber of Commerce, Dinesh Jain took an opportunity to curate a talk session with His Excellency Masayuki Taga, Consul General of Japan in Kolkata on the theme ‘Furthering Trade Ties between India and Japan’. Also present were Bengal’s top business leaders, leaders of civil society, and senior members of the diplomatic circle.

Consul General Taga emphasised that the Prime Minister of Japan, Shinzo Abe and the Prime Minister of India, Narendra Modi resolved to transform the Japan-India Special Strategic and Global Partnership into a deep, broad-based and action-oriented relationship reflecting a broad convergence of their long-term political, economic and strategic goals. He said, “It is obvious, that relations between India and Japan have substantially improved and deepened in nearly all fields. The constant and frequent exchanges at the ministerial level and between heads of governments, clearly signals India’s growing importance for Japan and vice versa.” In November 2016, Prime Minister Modi paid an official visit to Japan. This summit meeting has substantially advanced the “new era in Japan-India relations,” and Consul General Taga hoped that the two countries would lead the prosperity and stability of the Indo-Pacific region as a result of coordinating the “Free and Open India and Pacific Strategy” and the “Act East Policy.”

He discussed the importance for “Japan and India Vision 2025 Special Strategic and Global Partnership Working Together for Peace and Prosperity of the Indo-Pacific Region and the World”, which may serve as a guide for the new era in Japan-India relations.

Trade between the two countries has improved with the exchange of several goods. Japan’s FDI in India has risen since the global financial crisis, reaching nearly $3.5 billion in 2016. Japan is India’s 10th largest trading partner with the bilateral relationship worth around $14.5 billion. Tokyo accounts for a 2.34% share in Indian global trade with petroleum products, oil meals, marine products, gems and jewellery and iron ore being the principal commodities of exports to Japan while machinery, iron and steel, electronic goods, transport equipment and project goods are the major items that India imports. Japan is the largest importer of Indian shrimps. Indian mangoes have gained enormous popularity in Japan. Indian mangoes are of the same quality but are much less expensive than fruits from the south East Asian countries.  During 2011-12, India’s mango exports to Japan stood at 70 tonnes and were worth $0.18 million.

India has been ranked as the most attractive investment destination stated by the Japan Bank for International Cooperation (JBIC). The amount of Japan’s cumulative investment in India since April 2000 to March 2016 has been $ 20.966 billion, which is nearly 7 % of India’s overall FDI during this period. Japanese FDI in India has mainly been in automobile, electrical equipment, telecommunications, chemical and pharmaceutical sectors. On this point, the Consul General opined, “We want to focus on the investment side more between the two countries. Trade volume between India and Japan is limited compared to India’s trade relations with other countries like The United States of America and China. However Japan and India have improved trade relations over the years after signing several projects since 2000.”

Various Japanese companies have also flourished in India. The Consul General was a bit disappointed with the expansion of Japan’s business in West Bengal. He said, “Much of the investment goes to the southern and the western states of this country while the east remains deprived. Bengal needs to attract more investors. A few Japanese companies dealing in IT consultancy and fish feeds have been set up businesses in Bengal but if you compare it with the other cities, West Bengal is lagging behind. It needs to expand.”

He further highlighted that tourism should be the key sector for the countries to work on. Dinesh Jain said India’s relationship with Japan has now expanded to a wide range of areas including foreign policy, defence, trade and investment, science and technology, cultural and people-to-people exchanges. India is a major recipient of Japanese Official Development Assistance (ODA) and has also attracted significant investment from Japan. The number of Japanese companies operating in India has also increased from 627 in 2009 to 1,229 in 2016 indicating a significant diversification and strong economic relationship.

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