Tuesday, 29 Apr, 2025
The Minister emphasized that the Comprehensive Economic Partnership Agreement (CEPA), signed in 2011, has greatly enhanced bilateral trade. Image Source: The Economic Times
Japan has played a crucial role in India's economic growth, with Foreign Direct Investment (FDI) from Japan surpassing $43 billion between 2000 and 2024, making it India's fifth-largest source of foreign investment.
Union Minister of Commerce and Industry, Piyush Goyal, emphasized that India and Japan share a globally acknowledged strategic partnership built on brotherhood, democracy, culture, and economic collaboration. He made these remarks during his keynote address at the India-Japan Economy and Investment Forum on February 21, 2025.
The Minister pointed out that Japan's Seven Lucky Gods have roots in Indian tradition, highlighting the deep cultural connections between the two nations. He likened the India-Japan relationship to a blend of Sushi and spices—distinct yet complementary—creating a remarkable partnership. He also noted that Japan has played a crucial role in India's economic growth, with Foreign Direct Investment (FDI) from Japan surpassing $43 billion between 2000 and 2024, making it India's fifth-largest source of foreign investment.
The Minister emphasized that the Comprehensive Economic Partnership Agreement (CEPA), signed in 2011, has greatly enhanced bilateral trade, with more than 1,400 Japanese companies operating in India and 11 industrial townships across eight states housing Japanese enterprises. He highlighted Japan's significant role in India's infrastructure development, citing key projects such as the Mumbai-Ahmedabad High-Speed Rail and metro systems in Delhi, Ahmedabad, Bengaluru, and Chennai. Expressing optimism, he anticipated the upcoming launch of the Shinkansen bullet train service between Mumbai and Ahmedabad.
The Minister also highlighted Japan’s trade surplus with India. While responding to a joint query from the Japanese business community and media at the Japan-India Economic and Investment Forum, organized by Nikkei India in New Delhi on Friday, he said, “Many of the Japanese investments that happen in India source their input products from Korea, from Japan, from Taiwan, even from China and bring that to India. And use India only as a demand or only as a country to sell their products. I think it's important in today's world to look at reciprocal access, to look at increasing the access,”
He further said, “A case in point is Japan's scheme to send or export their steel from Japan to India, but the Japanese companies don't allow any Indian steel to be sold in Japan. This kind of unfair trading practice is certainly a matter of concern for us. We are ready to open the red carpet, we are ready to hang on and support all Japanese companies, but we would also urge Japanese companies to look at creating a bridge as a two-way bridge and not just as a one-way bridge to India.”
In the fiscal year 2023-24, bilateral trade between New Delhi and Tokyo amounted to $22.85 billion. During this period, Japan's exports to India stood at $17.69 billion, while imports from India totaled $5.15 billion. India's key exports to Japan include petroleum products, organic chemicals, seafood such as fish and crustaceans, nuclear reactors, boilers, machinery and mechanical appliances, as well as vehicles and their components. Meanwhile, India's primary imports from Japan consist of machinery, electrical equipment, iron and steel products, plastic materials, non-ferrous metals, and motor vehicle parts.
Source: Department of Commerce, Government of India
According to the Japan Bank of International Cooperation (JBIC) Survey Report on Overseas Business Operations by Japanese Manufacturing Companies in FY 2020, India ranked a close second to China for Japanese outward FDI over the mid-term (three years). While Japanese investment in India has grown in recent years, it remains relatively small compared to Japan's total global FDI. In 2021-22 and 2022-23, Japanese FDI in India amounted to $1.49 billion and $1.79 billion, respectively. Cumulatively, from 2000 to 2024, Japan's total investment in India reached approximately $43 billion, making it the fifth-largest source of FDI for the country. Key sectors receiving Japanese investment in India include automobiles, electrical equipment, telecommunications, chemicals, financial services (insurance), and pharmaceuticals.
Since 1958, Japan has been providing bilateral loans and grant assistance to India and remains its largest bilateral donor. Japanese Official Development Assistance (ODA) plays a key role in supporting India's economic growth, particularly in priority sectors such as power, transportation, environmental initiatives, and basic human needs. In the fiscal year 2021-22, Japan's ODA disbursement to India amounted to approximately JPY 328 billion (around $3.28 billion).
Over the last twenty years, the relationship between Japan and India has grown into one of the most significant partnerships in the Indo-Pacific. While Shinzo Abe is often credited with strengthening the bond between the two nations, the groundwork for this collaboration was laid much earlier, during the leadership of Yukio Hatoyama, Naoto Kan, and Yoshihiko Noda—all of whom served before Abe returned to office in 2012. Despite their relatively short terms, these leaders played a crucial role in expanding political, economic, and strategic cooperation with India, recognizing its importance in maintaining regional stability and counterbalancing China’s influence. This momentum has continued under subsequent leaders, including Fumio Kishida, and is expected to progress further under the current Ishiba administration.
