Kishida says investment will bring huge benefits for several industries in India
Prime Minister Kishida Fumio has announced US$42 billion investment in India over the next five years in a deal that is expected to boost bilateral trade and lift the Indian economy which Prime Minister Narendra Modi hopes to build to US$5 trillion in the coming years through industrial programmes and exports.
Kishida, on his maiden 19-20 Mar 2022 visit to New Delhi since assuming office, and Modi discussed a wide range of bilateral issues from economy to security cooperation.
In a televised press statement on 19 Mar 2022, Kishida said the investment plan will bring huge benefits for several industries, from the development of urban infrastructure to green energy — all of which are top priorities of Modi’s Government.
Japan is already among the leading investors in India with US$32 billion invested between 2000 and 2019 in the automobile, electrical equipment, telecommunications, chemical, insurance and pharmaceutical sectors among others.
Japan has also been supporting infrastructure development in India, including a high-speed rail project under construction. The Mumbai-Ahmedabad High Speed Rail (HSR), the only sanctioned HSR project in the country, is being executed with technical and financial assistance of the Government of Japan.
Also, India is conducting Detailed Project Reports (DPRs) on seven High Speed Rail Corridors: Delhi-Varanasi; Delhi-Amritsar; Delhi-Ahmedabad; Mumbai-Nagpur; Mumbai-Hyderabad; Chennai-Bangalore-Mysore; and Varanasi–Howrah.
The India-Japan bilateral trade was over US$11.87 billion in 2019-20.
India’s imports from Japan stood at US$7.93 billion while exports were US$3.94 billion in 2019-2020.
India is promoting exports to increase its share in global trade, and the latest Japanese pledged investment is expected to increase export-oriented industries especially in the value-added products by high-end manufacturers.
The multi-billion dollar Production Linked Incentive scheme and Make In India are rated as some of the best options for Japanese industrial groups to further their participation in the Indian prosperity and bring some visibility to New Delhi’s Make for the World concept.
Weak Rupee and India’s friendly relations with emerging markets as well as developed economies adds to the investors’ confidence to strategically plan production in the country, industry observers and economists said.
New Delhi is pursuing a growing number of Free Trade Agreements with major markets which will further complements the globally respected Japanese brands, while the Indian software power will continue to make it attractive to industrial groups to design, produce and export, an important strategy for Japan to maintain its share of global markets out of a third country production base, albeit the challenge of staying ahead of competition created by China, given its success of having become “factories of the world” with massive outputs.
Already a large number of countries are encouraging their industries to upgrade their outsourcing offices in India to design and manufacturing centres and maintain lead in the global supply chain.
There is no doubt that India still lacks a well define global marketing strategy but it is in the process of building international brands, albeit with the help of established corporations, including the Japanese heavyweight industries, they said.
“The US$42 billion investment over five years is a strong statement by the Japanese on need help to build industrial hubs and strengthen the Indian economy as the country is an important partner for security in the Indo Pacific region and an emerging leader in managing global environment issues,” said the observers.
The Prime Ministers elaborated on the economic partnership in a joint statement on 19 March 2022.
The Prime Ministers noted with appreciation that since elevation of ties to a Special Strategic and Global Partnership, there had been significant growth in economic cooperation. They expressed satisfaction that the investment target of JPY3.5 trillion announced in 2014 has been achieved. Noting steps taken by India to improve the business environment for Japanese investors in India, as well as other measures to boost economic growth and improve ease of doing business, they expressed their shared intention to realize JPY5 trillion of public and private investment and financing from Japan to India in the next five years, to finance appropriate public and private projects of mutual interest.
Prime Minister Modi expressed his appreciation for various initiatives taken by Japan to strengthen economic cooperation with India. In this context, the Prime Ministers recalled the establishment of the Japan-India Industrial Competitiveness Partnership (IJICP) in November 2021 and welcomed the formulation of a Roadmap under the IJICP, to further promote industrial cooperation between the two countries including in the areas of MSME (Micro, Small and Medium Enterprises), manufacturing and supply chains. They also confirmed to work together towards reliable, resilient, efficient supply chains in the region and welcomed the progress in this regard in areas such as sharing of best practices.
They emphasized the importance of collaboration to address illicit technology transfers, build resilient supply chains and strengthen the protection of critical infrastructure, including through the Quad. They welcomed the renewal of their bilateral currency swap agreement of US$75 billion. They recognized the need for enhancing bilateral trade and welcomed the amendment promoting trade of fish surimi between Japan and India under Japan-India Comprehensive Economic Partnership Agreement (CEPA). Stressing the importance of promoting trade and investment between the two countries, they encouraged further review of the implementation of CEPA through existing mechanisms. They welcomed India’s approval of imports of Japanese apples and relaxation of procedures of Indian mango exports to Japan.
The Prime Ministers recognized that digital technologies would play an increasingly important role in the post-COVID world and welcomed the growing cooperation under the Japan-India Digital Partnership with a view to enhancing digital economy through promotion of joint projects for digital transformation, support to provide opportunities for Indian IT professionals to work in Japan and Japanese companies, and collaboration made in the area of IoT, AI and other emerging technologies. In this regard, Prime Minister Kishida looked forward to attracting more highly skilled Indian IT professionals to contribute to the Japanese ICT sector.
They also welcomed the progress on the “Japan-India fund-of-funds” to mobilize funds for emerging Indian start-ups. Welcoming the signing of MoCs in the fields of Cybersecurity and ICT, they appreciated progress in the bilateral relationship in cyber domain and affirmed to further deepen cyber engagement with each other in multilateral fora, including in the United Nations. They shared the view to further cooperate in various fields like 5G, Open RAN, Telecom Network Security, submarine cable systems, and Quantum Communications.
They welcomed the progress of bilateral cooperation in the field of science and technology, including through the holding of the 10th Meeting of the Japan-India Joint Committee on Science and Technology Cooperation in November 2020, and looked forward to the joint lunar research project. They reaffirmed the commitment to strengthen the efforts so that the vision for technologies, guided by the Quad Principles on Technology Design, Development, Governance, and Use, would be further shared by all like-minded nations.
Prime Minister Modi appreciated Japan’s support for India’s socio-economic development over the years. The Prime Ministers welcomed the signing of the exchange of notes concerning seven yen loan projects in which Japan provides over 300 billion yen (over Rs.20,400 crores) in total. The Prime Ministers expressed satisfaction on the progress in the flagship bilateral cooperation project of the Mumbai-Ahmedabad High Speed Rail (MAHSR). They affirmed that this project was an important symbol of Japan-India collaboration and would lead to transfer of technology which would further enhance the capacity of railways in India. They reaffirmed that they would work together for the commencement of operations at the earliest possible timing. Prime Minister Modi appreciated Japan’s cooperation on the MAHSR and various Metro Projects in India and looked forward to the planned preparatory survey for the Patna Metro.
The Prime Ministers reaffirmed the significance of collaborative projects between Japan and India in the Indo-Pacific region. They acknowledged the progress in ongoing projects in Bangladesh and looked forward to exploring expansion of such cooperation to ASEAN, Pacific island countries and others. They appreciated the importance of their continued collaboration through the Act East Forum (AEF) for sustainable economic development of India’s North Eastern Region and for enhancing the Region’s connectivity with Southeast Asia. They welcomed the launch of the “Japan-India Initiative for Sustainable Development of the North Eastern Region of India”, which includes “Initiative for Strengthening the Bamboo Value Chain in the North East” and cooperation in health care, forest resources management, connectivity and tourism in different states of the North Eastern Region.
The Prime Ministers reaffirmed their resolve to make the Japan-India Special Strategic and Global Partnership more robust and complementary in view of the 70th anniversary of the establishment of diplomatic relations in 2022 through people-to-people exchanges, tourism and sports. They welcomed the opening of the Rudraksha Convention Centre in Varanasi as a symbol of Japan-India friendship. They appreciated the progress made in Japanese language education and training in India and decided to expand this initiative through the Japan Overseas Cooperation Volunteers (JOCV) scheme.
They reaffirmed the importance of strengthening cooperation in the area of skill development and creation of employment opportunities. They welcomed the fact that more than 3,700 Indians were trained in JIMs (Japan-India Institutes for Manufacturing) and JECs (Japanese Endowed Courses) in the past year. They noted with pleasure the operationalization of the Specified Skilled Worker (SSW) system under the Memorandum of Cooperation signed in January 2021. They welcomed the starting of SSW examinations in India earlier this year and noted that some skilled workers have started working in Japan already as SSW. They also noted with pleasure that approximately 200 Indians are staying in Japan as Technical Intern Trainees. They concurred to work together to boost the number of skilled Indians who could contribute to Japanese economy through these existing frameworks. fiinews.com
