Monday, December 6, 2021

Bolstering India-Japan Economic Partnership

The third edition of Invest India Exclusive Investment Forum—Japan Edition was held recently. The objective is to further strengthen India-Japan trade and investment cooperation by creating enabling conditions for businesses as they grapple with the impact of COVID 19. Japan is one of the key partners in advancing economic modernisation of India, and Prime Minister Narendra Modi’s vision of building a self-reliant (Atmanirbhar) India. Sourcing advanced technologies and active mobilization of Japanese public and private sector investments are of vital importance for New Delhi.

India is a preferred destination for Japanese companies owing to its huge market. India featured in the top position, overtaking China, in the latest “Survey Report on Overseas Business Operations by Japanese Manufacturing Companies” done by Japan Bank for International Cooperation (JBIC). Japan is the fourth largest investor in India with cumulative FDI inflows of US$ 33.5 billion from 2000-2020, accounting for over 7 percent to India’s total FDI inflows during this period. There are around 1441 Japanese companies in India. Japan has projected success stories under ‘Make in India’ with the Suzuki-Toshiba-Denso joint venture for automotive lithium-ion battery packs aimed at the domestic and global markets, and Made-in-India Suzuki ‘Baleno’ cars that are exported to the international market.

To advance Japanese business, a focussed inter-ministerial group is dedicated to offer solutions with reference to some of the challenges investors face in India including customs, quality, export procedures and logistics. This group is composed of representatives from the commerce and industry, finance, railways, and roads and surface transport ministries. They are scheduled to hold meetings with some 50 Japanese companies in over four sessions. Some companies in this group are already operating in India. The Japanese side reportedly have around 200 investment plans in India. Meanwhile, a pan-India investment clearance cell is likely to start by 2021 with the objective of improving the ease of doing business.

To help facilitate investments, India-Japan Industrial Competitiveness Partnership (IJICP) was launched in December 2019 between the Ministry of Commerce and Industry and Japan’s Ministry of Economy, Trade and Industry (METI). The objective is to jointly work towards enhancing India’s industrial competitiveness by better utilization of industrial zones to promote FDI, easing cost of logistics, and so on. Also, the Japan Plus is the one-stop-shop for exploring and materializing India-entry plans for Japanese businesses.Considerable progress has been made with the inception of Japan Industrial Townships (JIT) that provides investment incentives. Japan is the only country that currently has 12 dedicated country-focused industrial townships in India. Additionally, the 13th JIT is planned in Assam in order to promote domestic manufacturing. Moreover, with the aim of connecting the gaps between the start-up ecosystems, India-Japan start-up hub was set up in Bengaluru which serves as an interface between respective start-ups and firms, facilitating collaboration with market and investors.

Meanwhile in 2019, India raised concerns over the adverse trade balance and sought review of the Comprehensive Economic Partnership Agreement since market access for India’s goods and services have not reached its full potential. Balancing trade is a top policy priority for India. India-Japan bilateral trade amounted to US$ 17.63 billion during 2018-19. Exports from Japan to India during this period were US$ 12.77 billion and imports were US$ 4.86 billion.

Prime Minister Modi and his Japanese counterpart Shinzo Abe have energised an era of high-powered diplomacy. The Indian Prime Minister articulated that “a strong India and Japan will not only enrich our two nations. It will also be a stabilising factor in Asia and the world.” Robust economic engagement is a key pillar of the India-Japan Special Strategic and Global Partnership. With complementarities in their demographic profile and Japan’s hardware and India’s software, there is enormous scope for strengthening India-Japan economic cooperation in the future.

Script: Dr. Titli Basu, Strategic Analyst On East & South East Asia

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