Way to go for Indian exports in trade with Japan

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In September this year, DMIC trust cleared six projects with proposed investment of R1.1 lakh crore. (AP) In September this year, DMIC trust cleared six projects with proposed investment of R1.1 lakh crore. (AP)
SummaryIn September this year, DMIC trust cleared six projects with proposed investment of R1.1 lakh crore.

With trade between India and Japan at $18.51 billion, Tokyo accounts for a 2.34% share in India’s global trade with petroleum products, oil meals, marine products, gems and jewellery and iron ore being the principal commodities of export to Japan while machinery, iron & steel, electronic goods, transport equipment and project goods are the major items that India imports.

India Japan trade

Though a Comprehensive Economic Partnership Agreement (CEPA) was signed between India and Japan in 2011, the pact has led to imports from Japan increasing at a faster rate than exports from India. In 2012-13, India’s exports to Japan were $6.10 billion while the imports stood at $12.41 billion, leaving a trade deficit of $6.31 billion. 

The agreement covers goods, services, rules of origin, movement of natural persons, telecom, financial services, investment, IPRs, government procurement, sanitary and phytosanitary measures, customs procedures and cooperation in other areas and the two sides have set a bilateral trade target of $25 billion by 2014.

Significantly, the presence of Japanese companies in India has increased from 555 sites in 2008 to 1,422 sites in 2011 and is expected to reach 2,500 sites by 2015. Japan has partnered India in several high-key, high-value, high-priority projects like the Western Dedicated Freight Corridor Project and the Delhi-Mumbai Industrial Corridor (DMIC) Project.

From April 2005 to March 2013, the cumulative Indian investments into Japan are around $371.46 million. On the other hand, according to JETRO, Japanese investments in India are around $15.93 billion, inclusive of foreign direct investment as well as portfolio investment and M&A.

In September this year, the DMIC trust cleared six projects with a proposed investment of R1.1 lakh crore.

This includes an integrated industrial township at Greater Noida, an integrated multi-modal logistics hub in Haryana and a new rail line from Bhimnath to Dholera. The DMIC project, valued at $90 billion, seeks to create mega industrial infrastructure along the Delhi-Mumbai Rail Freight Corridor. Japan is giving financial and technical aid for the project, which will cover seven states totaling 1,483 km. It has committed an investment of $4.5 billion.

The first phase of the two investment regions (Dholera in Gujarat and Shendra-Bidkin in Maharasthra) will be launched in this financial year.

Both the governments have now decided to jointly develop infrastructure in the Chennai-Bengaluru-Chitradurga Industrial Corridor which will pass through the three southern states of Karnataka, Andhra Pradesh and Tamil Nadu.

Also, the two sides plan to establish a Japanese Electronics Manufacturing Township with Japanese assistance in India with a world class infrastructure. Besides, a Japan Help Desk has been set up in the Department of Electronics and Information Technology (DeitY) which will facilitate Japanese companies to invest in electronics sector in India.

“There are huge opportunities for investment in sectors like infrastructure including investments in DMIC region, power, metals, renewable energy, manufacturing, automobiles and auto parts, agro processing and food processing, electronics hardware manufacturing (EHM) and creative industries,” said commerce and industry minister Anand Sharma recently.

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