As Prime Minister Narendra Modi and the visiting Japanese Prime Minister Shinzo Abe sit down for bilateral talks on Thursday, the two sides will discuss the sharp decline in bilateral trade in the last four years. Despite the increased bonhomie, and 10 meetings between the leaders, this is a major challenge confronting the bilateral ties.
“This is an area of concern, and both leaders will discuss the issue…. It’s not a new issue…has been continuing for some time now. We hope to arrest the trend, and turn it around,” a government official told The Indian Express on Wednesday. According to official data, bilateral trade between the two countries more than doubled between 2006-07 and 2012-13. However, total trade has come down to $14.51 billion in 2015-16 from a peak of $18.5 billion in 2012-13.
In 2015-16, India’s exports to Japan were worth $4.66 billion, while imports amounted to $9.85 billion. In 2016-17, the country’s exports fell by 17.38 per cent — to $3.85 billion — and imports by 2.2 per cent to $ 9.63 billion.
“The negative or slow growth in trade with Japan is a matter of concern for India in view of the fact that there is high potential for faster progress on goods and services trade. The share of India-Japan trade in Japan’s total trade has been hovering around 1 per cent but it is in the range of 2.05 to 2.34 per cent of India’s total trade in the last five years,” according to a note prepared by the Central government.
India’s primary exports to Japan have been petroleum products, chemical elements/compounds, fish and fish preparation, non-metallic mineral ware, Metalliferous ores and scrap, clothing and accessories, iron and steel products, textile yarn/fabrics, machinery, feeding-stuff for animals. Officials said that economic relations between India and Japan have vast potential for growth, given the obvious complementary that exists between the two Asian economies. Japan’s interest in India is increasing due to a variety of reasons, including India’s huge and growing market and its resources, especially the human resources.
The signing of the historic India-Japan Comprehensive Economic Partnership Agreement (CEPA) and its implementation from August 2011 has accelerated economic and commercial relations between the two countries. During Modi’s visit to Japan in September 2014, Abe had pledged $35 billion in investment in India’s public and private sectors over the next five years. The two countries also set a target of doubling Japanese FDI and the number of Japanese firms in India by 2019.
“This current trend only means that the initiatives taken so far have not worked, and we have to find new and creative ways to stop the decline,” the source in the government said.