India Foundation and the Kajima Institute of International Peace (KIIP), Tokyo, Japan jointly organised the Indo-Japan Business Development Dialogue, a year-long initiative between India Foundation, New Delhi, and the Kajima Institute of International Peace (KIIP), Tokyo, on the theme “The Future of India- Japan Business Development/ Strengthening of Trade Ties”. Eminent businessmen, academicians, and former diplomats from Japan & India participated in all 12 editions. From India, the dialogue was addressed by Ms Deepa Gopalan Wadhwa, Indian Foreign Service (Retired) Former Ambassador to Sweden, Latvia, Qatar, Japan and the Marshall Islands. Mr Ritesh Sharma, an MBA graduate from IIM Lucknow, Mr Manoj Kohli, Country Head, SoftBank, India, Mr Ajay Sethi, Managing Partner of ASA & Associates LLP (ASA), India, Mr Bharat Joshi, Co-chair CII Japan, Mr Bharat Kaushal, Managing Director, Hitachi India Pvt. Ltd, and Dr Srabani Roy Choudhary, Professor, Jawaharlal Nehru University, Delhi, India.
From Japan, the dialogue was addressed by Mr Naotaka Nishiyama, President of Tech Japan, Dr Katsuo Matsumoto, Head, of Infrastructure Engineering Department, Japan International Cooperation Agency (JICA), Dr Mai Fujita, Director, Southeast Asia Studies Group II, Area Studies Center, Institute of Developing Economies, Japan External Trade Organization, Dr Harukata Takenaka, Professor at the National Graduate Institute for Policy Studies, and Mr Hiroki Sekine of JBIC, a Government-sponsored export credit agency.
In a year-long series of discussions, experts from both India and Japan have discussed and deliberated on how India-Japan relationship should look like, what the potential is, where we are missing the mark and what is the way ahead. Here’s an overview.
India and Japan have a prominent shared history. The exports from India to Japan have ranged from 3.8 billion USD to 4.9 billion since 2016 and were not heavily impacted during the COVID-19 crisis. Similarly, the imports to India from Japan weren’t much affected and have ranged between 9.8 billion USD to over 12.8 billion dollars.
Japan has contributed through FDIs to India for a long time, since 2014 Japanese FDI has gone up to 4.3 billion USD in Indian markets. This includes companies like Nippon Steel, Fuji Electric, and Uniqlo in the manufacturing and retail sector, names like SMBC, Jera, NEC, and NTT
Communications in Services and Soft Bank, GMO, ORIX, Toyota Tshusho in the investment sector. It is paramount to mention that the total outbound FDI from Japan has been USD 2.4 Trillion between 1995 and 2021. North America and Europe have accounted for about 2/3rd of it with approximately USD 700 billion each.
It has been suggested that India continues offering on-the-ground structural support to emerge as a long-term preferred investment destination for Japanese capital. Companies in Japan also need to continue with prudent investing philosophy and market-driven post-investment strategies. In the future, the proactive resolution and anticipation of likely challenges in capital incentive sectors are very important. The mandatory listings in infrastructure and NBFCs could be a prevention mechanism.
Japan is facing challenges, especially in terms of the usage of funds in development, marketing, recruitment, and overseas expansion, and the shortage of IT manpower. To engage highly skilled Indian talents in Japan, Tech Japan is in collaboration with IIT Madras, IIT Bombay, IIT Kharagpur, Kanpur, IIT Roorkee, IIT Hyderabad, IIM Bangalore, IIM Ahmedabad, and IISC Bangalore. The language barrier between India and Japan came out as a major concern.
Japan is the 12th largest trade partner for India and India is the 18th largest trade partner for Japan. This shows despite all friendships, partnerships, and good relationships, our trade ties are not up to the mark.
India is at a bright spot in the world, as it is growing at 6- 7%, and is expected to grow by another 6-7% next year, where the entire world is in recession. So, this is the right time for Japan to also look at India for a higher degree of trade and investment, especially in sectors like infrastructure, manufacturing, software, start-ups, pharmacy, healthcare, defence, & tourism.
In the past decade, the relationship between India and Japan has deepened the diplomatic, military, economic, and cultural ties. The scope of cooperation has expanded. India has started spending more on transportation, communication, health care and other areas, which shows that the size of the wallet has dramatically increased in a manner that the generations are able to spend much more on interesting things than just necessary living. This proves that consumption is high in India. Japan has an ageing population and the childbirth rate is controlled. So, Japan’s biggest challenge today is to balance the population. Older people are one challenge, but the bigger challenge is much of the products are directed at children or other consuming markets.
India’s new foreign trade policy which has been unveiled in 2023 would be organic in nature and would continue to look towards enhancing India’s position as a country where business would come.
We see huge engagement projects initiated by Japan especially with respect to the Bay of Bengal initiative and linkages between the northeast India & Bangladesh. There has been a lot of focus on infrastructure development especially after 2018, in which JICA is predominantly working. We also have the Bamboo initiative that has happened, which is a new kind of initiative. India & Japan are keen on the technology transfer and infrastructure development. Both the countries should further scale up the existing economic ties, enhance the economic development projects, upgrade Hi-tech verticals, boost manufacturing sector, automobile and electronic industry.