Daily Times (Lahore) | 17 Aug 2007

Japan to push business ties in India

TOKYO: Japan and India will seek to bolster lagging business ties between Asia’s largest and third-largest economies when their leaders meet in New Delhi next week.

Japan is India’s biggest donor of economic aid, but trade and investment between the two economies have been unspectacular, as Japanese companies have focused on China and Southeast Asia, such as Thailand and Vietnam. “Japan’s presence there does not match that of its standing as the largest donor,” said Shuji Uchikawa, an India expert at the Institute of Developing Economies. Japan is only India’s 10th-biggest trade partner, behind countries that include Belgium and Switzerland, and is the fourth-largest provider of direct investment.

Analysts said many Japanese firms stopped investing in India seeing the limited size of the domestic market, a result of the small share of the middle class, and because they already have manufacturing bases in nearby Southeast Asian countries.

But in a sign that Japan Inc is serious about boosting its profile in India, Japanese Prime Minister Shinzo Abe will be taking about 200 business executives led by the head of Japan’s largest business lobby when he visits the country August 21-23. The two countries have already agreed to forge an economic partnership agreement within two years, and they also have an ambitious plan to build, with Japanese assistance, a $90 billion industrial corridor with state-of-the-art infrastructure linking Delhi and Mumbai.

High-Speed freight line: Tokyo is set to offer around 400 billion yen ($3.44 billion) in low-interest loans as official development aid to help fund the construction of a high-speed freight line between New Delhi and Mumbai as part of the industrial corridor project, the Sankei Shimbun reported this week.

“Given India’s stable growth, Japanese investment there is likely go grow from now on,” said Uchikawa, referring to an average of 8 percent growth India’s economy has recorded for the last three fiscal years. He added the Japanese executives would in particular be keen to see further easing of foreign investment restrictions still in place for some industries. While Japanese firms may also be keen to build nuclear power plants in India, which may be made possible following India’s controversial nuclear deal with the United States. reuters