Millennium Post

All eyes on Japanese PM’s visit

Indian government is giving special importance to the visit of the Japanese Prime Minister Shinzo Abe to India in January 2014. The visit is special for two reasons. Firstly, there is a big possibility of the crucial agreement on nuclear energy cooperation being signed during the visit. Secondly, there will be a big push to the Japanese investments in India, especially in the infrastructure sector including   road and rail transport. Hectic consultations are being held on both the areas and the Indian officials are hoping that the India-Japan declaration in January 2014 will be a historic one imparting a new dimension to India-Japan political and economic ties.

India and Japan are very keen to cooperate in the energy area. The issue was high on the Indian prime minister’s agenda to push for an early conclusion of a bilateral agreement on civil nuclear  cooperation which stalled following the Fukushima nuclear disaster in March 2011.The new Japanese government has been  taking follow up actions on the proposed agreement at the instance of India and the Japanese  Emperor during his visit to India  early this month has given the hint that excepting two/three small irritants, the draft agreement on  civil nuclear  cooperation  is  ready and it should be possible to finalise the agreement details before the visit of the Japanese PM on 24 January. Indian officials are constantly in touch with the Japanese government and especially Japanese PM’s office and there are hopes that the irritants will be removed for facilitating the agreement.

Japan has been steadily making foreign direct investment (FDI) to India. The Japanese FDI inflow to India between April 2000 and 2012 was $13.3 billion, placing it in the fourth place after Mauritius, Singapore and Britain. Japanese firms operating in India support over 1,52,000 local jobs. Japan is also importing more from India as the two sides targeted at doubling the bilateral trade to $25 billion by 2014. India’s export to Japan jumped to $5 billion in 2010-2011 from the earlier level of $3 billion. The items of export include mineral fuels, mineral oils, natural and cultured pearls, precious and semi-precious stones, iron and steel, fish and fodder. On the other hand, Japanese exports to India include boilers, machinery appliances, optical, medical and surgical instruments, and articles of iron and steel.

 Trade between India and Japan is expected to double in the coming years. In 2012, bilateral trade was worth a relatively modest of nearly $19 billion; it is targeted to grow to $25 billion by 2014.

This expectation is powered by the signing of a free trade agreement, known as the Comprehensive Economic Partnership Agreement, which eliminates tariffs on most goods traded between the two countries. Fundamental reasons for the rapidly growing Indo-Japan business ties are rooted in demographics and industrial expertise. There are nearly 1,000 Japanese companies operating in India. Seven years ago, the number was only 600. Japan has an aging population; India’s is overwhelmingly youthful. Their presence is growing as more and more Japanese medium and small enterprises find India an exciting place for trade an investment. Japan has technology and infrastructure know-how, both of which India sorely needs. India has natural resources and a desirable geographic location. It is closer to European and Middle Eastern markets for Japanese goods, substantially reducing shipping times and costs.

The upcoming freight corridors under Japanese participation open a new era of business cooperation. State governments and entrepreneurs, big and small, along the route have chalked up plans to take full advantage of the modern infrastructure facility by making investments in a host of areas. For instance, the Rajasthan Industrial Development and Investment Corporation’s Neemrana Industrial area where a Japanese zone has come up in the Alwar district. The state government recognised the possible benefit early on, and in 2006 dedicated 1,100 acres on the highway linking Jaipur and Delhi for what it calls Japan City. The area is a miniature special economic zone, offering tax breaks and electricity links. It houses a number of manufacturing companies including Daikin, Nippon Steel and Nissin Brake. A residential hub is being built nearby for employees and their families, with plans for a number of housing complexes, shopping malls and hotels. The landmark Delhi-Mumbai Industrial Corridor is a gigantic project aimed at linking India’s political and financial capitals with modern highways, railways, special economic zones and freshly-built intermediate cities. (The Jaipur-to-Delhi highway where Japan City is built is a key part of the project.) Japan has pledged $4.5 billion towards what could be a total bill of $90 billion, most of which authorities hope will come from public-private partnerships (PPP) Seven new cities are expected to come up along the industrial corridor in the first phase of the project. As many as six state governments are separately involved in the process of creation of these new urban centres. They are: Uttar Pradesh, Madhya Pradesh, Haryana, Gujarat, Rajasthan and Maharashtra. Proposed high-speed trains in the route are expected to dramatically reduce transit times to India’s western seaports for goods manufactured in the north.

The proposed visit of Japan’s Prime Minister Shinzo Abe in January is expected to further strengthen the ongoing Indo-Japan cooperation and social as well as business ties and take forward the civil nuclear cooperation programme which Prime Minister Manmohan Singh discussed among other strategic matters with his Japanese counterpart during his Japan visit, in 2013.

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