India’s Trade Opportunities and Economic Co-operation for India with Japan

Abstract

After the WW II, the focus of Japan’s economic relations with India switched from the prewar import of cotton to the import of iron ore. Relations developed steadily as Japan’s imports of ore and exports of manufactured products increased. Total trade between the two countries crossed US$10 billion in 2007-2008, adding foreign direct investment from Japan to India from April 2000 to July 2008 was US$2.2 billion. Japan ranks third in foreign technology transfer approvals, trailing only the United States and Germany. A total of 871 such technology collaborations between India and Japan were approved from August 1991 to June 2008. On the other hand, there has been a notable increase in Japan’s official development assistance (ODA) to India. India has been the largest recipient of Japan’s yen loans since 2003. In August 2008, Japan pledged to extend Japanese ODA loans to five projects. Given that the issue of ‘underdeveloped infrastructure’ comes up repeatedly in Japanese perspectives on the business environment in India, the recent ODA disbursements are a strong signal of growing Japanese economic focus on India.” Japan has agreed to provide US$4.5 billion for the first phase of the Delhi-Mumbai Industrial Corridor, and that five Japanese companies already have decided to set up industrial bases along the corridor. India and Japan are also in the midst of negotiations for a comprehensive economic partnership agreement. Over 80% of Japanese companies in India are profitable, and more than 90% have expansion plans.