TRADE RELATIONSHIP BETWEEN INDIA & JAPAN

By:PEDA BABU VADIYALA

2015MBA0155CENTRAL UNIVERSITY OF KARNATAKA

Japan• Japan is an island nation in the Pacific Ocean with dense cities,

imperial palaces, mountainous national parks and thousands of shrines and temples. Shinkansen bullet trains connect the main islands of Kyushu (with Okinawa's subtropical beaches), Honshu (home to Tokyo and Hiroshima’s atomic-bomb memorial) and Hokkaido (famous for skiing). Tokyo the capital, is known for skyscrapers, shopping and pop culture.

• Capital: Tokyo• Currency: Japanese yen• Prime minister: Shinzo Abe• Population: 127.3 million (2013)

Introduction

• Trade between Japan and India is said to have begun in the 6th century when Buddhism was introduced to Japan. Indian culture, filtered through Buddhism, has had a great impact on Japanese culture, and this is the source of the Japanese people's sense of closeness to India.

Contd..

• After World War II, in 1949, Indian Prime Minister Jawaharlal Nehru donated two Indian elephants to the Ueno Zoo in Tokyo. This brought a ray of light into the lives of the Japanese people who still had not recovered from defeat in the war. Japan and India signed a peace treaty and established diplomatic relations on 28th April, 1952. This treaty was one of the first peace treaties Japan signed after the World War II.

Contd..

• Ever since the establishment of diplomatic relations, the two countries have enjoyed cordial relations. In the post World War II period, India's iron ore helped a great deal Japan's recovery from the devastation. Following Japanese Prime Minister Nobusuke Kishi's visit to India in 1957, Japan started providing yen loans to India in 1958, as the first yen loan aid extended by Japanese government. Since 1986, Japan has become India's largest aid donor, and remains so.

Contd..

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

Indian Exports to Japan • Agricultural products,• Fresh Fruits and dried fruits,• Fruit juices and concentrates,• Vegetables,• Oilseeds,• Vegetable oils and fats,• Edible nuts,• Sugar and honey,• Grains and Pulses,• Wheat,• Iron Ore • Chemicals

Contd..• Tea,• Coffee,• Spices and herbs,• Tobacco,• Leather garments and goods,• Handicrafts,• Carpets,• Cashew,• Fisheries products,• Cotton,• Animal feed.

Contd..

• The block buster item from India remains Indian seafood products, especially Indian shrimps. Japan is the largest importer of Indian shrimps.

Contd..

• Indian mangoes are getting huge popularity in Japan. Moreover, Indian mangoes are of same quality but are much less expensive than crops from the south East Asian countries.

• During 2011-12, India’s mango exports to Japan stood at 70 tonnes worth $0.18 million.

India Imports from Japan

• Machinery• Plastic• Transport equipment• Electronic goods• Iron and steel• Project goods• Metal

Contd..

Japan-India Trade (Yen: billion)Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Trade from India to Japan

352 472 491 544 348 497 543 559 690 739

Trade from Japan to

India388 518 723 819 591 792 882 845 839 861

Direct Investment from Japan (Yen: billion)

Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Direct Investment from Japan

29.8 59.7 178.2 542.9 344.3 241.1 181.4 222.8 210.2 219.3

Contd..

Economic Assistance

• Loan: 118.64 billion yen • Grants: 0.217 billion yen • Technical Cooperation: 3.78 billion yen

Cultural Relations

• The Japanese have a very good opinion of India, they recognize India as TENJUKU (the land where Buddha was born).

• Both governments "Japan-India Exchange Year 2007" both in Japan and in India to commemorate the 50th anniversary of the Cultural Agreement.

• The year 2012 marked the 60th Anniversary of the Establishment of Diplomatic Relations between Japan and India.

Contd..

• The tradition and social values of India and Japan are similar and to commemorate the long and good friendship between India and Japan, the government of both the countries have marked the Year 2007 as India and Japan Friendship year.

Number of Residents

• Number of Japanese nationals residing in India: 8,313 (as of October, 2014)

• Number of Indian nationals residing in Japan: 24,524 (as of December, 2014)

• From 838 in 2008 it has gone up to 1804 Japanese companies in 2012, They have branches in India.

Bilateral Treaties and Agreements• Treaty of Peace (1952)• Agreement for Air Service (1956)• Cultural Agreement (1957)• Agreement of Commerce (1958)• Convention for the Avoidance of Double Taxation (1960)• Agreement on Cooperation in the field of Science and

Technology (1985)• Japan-India Comprehensive Economic Partnership

Agreement (2011)

Contd..

• Agreement between Japan and the Republic of India on Social Security (2012)

• Agreement between the Government of Japan and the Government of the Republic of India Concerning the Transfer of Defence Equipment and Technology (2015)

• Agreement between the Government of Japan and the Government of the Republic of India Concerning Security Measures for the Protection of Classified Military Information (2015)

Contd..

• As of 2013, bilateral trade between India & Japan stood at US$16.31 billion & is expected to reach US$50 billion by 2019-20.

• In the year 2007, the Japanese Self-Defence Forces and the Indian Navy took part in a joint naval exercise in the Indian Ocean, known as Malabar 2007.

Contd..

• In October 2008, Japan signed an agreement with India under which it would provide the latter a low-interest loan worth US$4.5 billion to build a SHINKANSEN bullet train railway project between Delhi and Mumbai.

• This is the single largest overseas project being financed by Japan and reflected growing economic partnership between the two nations.

Contd..

• India is also negotiating to purchase US-2 AMPHIBIOUS aircraft for the Indian Navy.

Year 2007-08

2008-09

2009-10 2010-112011-12 2012-13 2013-14 2014-

152015-16

(Apr-Mar)

India's export

to Japan3.86 3.02 3.63 5.09 6.33 6.09 6.81 5.38 4.66

India’s Total Export 163.13 185.29 178.75 251.13 305.96 300.27 314.40 310.33 262.29

%Share 2.37 1.63 2.03 2.07 2.07 2.03 2.17 1.73 1.77

India's import from Japan

6.32 7.89 6.73 8.63 12.10 12.51 9.48 10.13 9.85

India’s Total Import 251.65 303.69 288.37 369.77 489.32 491.94 450.20 448.03 381.00

%Share 2.52 2.60 2.34 2.33 2.47 2.54 2.11 2.26 2.58

India-Japan

bilateral trade10.18 10.91 10.36 13.72 18.43 18.61 16.39 15.51 14.51

Percentage Change 36.5 7.2 -5.04 32.4 34.3 1.00 -11.9 (-) 5.36 (-) 6.4

(Dollar billion)

Contd..

Year Japanese FDI in India (million US$) % Change

2001 150 (-) 14.32002 146 (-) 2.72003 124 (-) 15.12004 139 12.12005 266 91.42006 512 92.52007 1506 194.12008 5551 268.62009 3664 (-) 34.0

2010-11 2864 (-) 21.82011-12 2326 (-) 18.82012-13 2786 19.82013-14 1718 (-) 38.362014-15 2084 21.32015-16 2614 25.4

Contd..

Contd..• Japan 4th largest investor in India with a share

of 8% of total FDI from 2000-2013.• Japan investments in automobiles, electrical,

service, telecom.• Japanese companies such as Sony, Toyota, and

Honda have manufacturing facilities in India.• Maruti - the car that “Drives India Home” since

1980s.