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Former Prime Minister of Japan Yoshihide Suga has said that the public and private sectors in Japan were in complete agreement on the importance of strengthening relations with India and he wanted to pitch for improvement of business environment in the country.
“I will continue to encourage the Japanese private sector to invest in India. And today, in my meeting with Prime Minister Narendra Modi, I would like to ask him to improve the business environment in India,” said Suga, who now chairs the Japan-India Association.
Suga was addressing an India-Japan Business Forum organised by CII jointly with Japanese business federation Keidanren on Thursday prior to his meeting with the Prime Minister.
Suga’s comment on the business environment in India is important as Japan has been looking at India as a possible destination for diverting investments from China after the Covid-19 pandemic disrupted global supply chains. Japanese industry has been hesitating to step up investments as they want a more predictable policy regime in India, industry sources said.
Suga is in India with a Japanese business delegation led by Keidanren, CII’s MoU partner in Japan. “I am very pleased to visit India with the Japanese delegation. While being here I witnessed India’s vibrancy. I can feel the steam and energy of Indian economy…After the meeting with PM Modi we would clearly like to strengthen our relations with India and we have established an objective of investing $5 trillion in India,” he added.
Last year, the Japanese government set a goal of 5 trillion yen in public and private investment and loans to India over the next five years to deepen economic ties, Suga said.
“I hope that the representatives of Indian industry will deepen their cooperation with private companies in Japan and play a major role in the development of Japan-India economic relations,” he said.
In its 2020 supplemental budget, the Japanese government had offered to extend subsidies to its companies to partly relocate from China and disperse their manufacturing sites across ASEAN and in Bangladesh and India. However, this did not lead to any substantial additional investments into India as many Japanese investors have expressed apprehension about the unpredictability of Indian policies and the curbs on trade and investment flow from bordering countries including China, according to industry sources.
India’s concern
Indian industry, too, has concerns about market access restrictions in Japan that hamper exports. While Japan is the only G7 nation with which India has a free trade agreement–the two countries entered into a Comprehensive Economic Partnership Agreement (CEPA) in 2011 extending duty free/low duty market access to most items–Indian exporters have not been able to take advantage of it mainly because of quality and technical barriers and other restrictions in the Japanese market.
India’s exports to Japan declined to $5.46 billion in 2022-23 from $6.33 billion in 2011-12. On the other hand, its imports from Japan increased to $16.49 billion in 2022-23 from $11.96 billion in 2011-12, per Commerce Ministry figures.
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