Reports
International Symposium
Strengthening India-Japan Economic Relations Opportunities and Challenges in Context of Changing Global Order
On 20 November 2024, the Institute of Developing Economies (IDE-JETRO), Embassy of India in Tokyo, Research and Information System for Developing Countries (RIS) co-hosted an international Symposium titled “Strengthening India-Japan Economic Relations Opportunities and Challenges in Context of Changing Global Order.”
On this page, you can access videos of the keynote addresses and panel discussions delivered at the symposium.
Synopsis of the Symposium
Date and time: Wednesday, 20 November 2024, 14:00-17:00 (Japan Standard Time)
Venue: 5F East Conference Room, JETRO Headquarters, Tokyo
Organizers: Institute of Developing Economies (IDE-JETRO), Embassy of India in Tokyo, Research and Information System for Developing Countries (RIS)
Program |
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Opening Remarks
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Special Session “India@2047: Strengthening India-Japan Cooperation”
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Session 1: “India-Japan Economic Relationship Revisited”
Discussion
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Session 2: “India-Japan Economic Cooperation Through the Connectivity Initiatives”
Discussion
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Closing Remarks
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Opening Remarks
H.E. Mr. Sibi George, Ambassador of India to Japan
I am happy to participate in today's symposium, which focuses on the important theme of Japan-India economic cooperation. The important relationship between Japan and India in the Indo-Pacific region in the economic, geopolitical and security spheres is promoted as a “Special Strategic and Global Partnership”. Many Indian ministers visited Japan last year and they are highly aware of the importance of relations with Japan. More than 1,500 Japanese companies have entered India. There are some success stories, but I feel that it is still not enough. I want people to be attracted to our 8 per cent annual economic growth. I have visited all the prefectures and feel that interest on India is growing.
Special Session
“India@2047: Strengthening India-Japan Cooperation”
Dr. Rajiv Kumar, Chairman, Pahle India Foundation
The current situation in India is favorable both domestically and internationally. Reforms have accelerated over the past nine years of the current administration. Efforts towards renewable energy are progressing, and the number of internet users and opening of bank accounts is also increasing. Infrastructure is being developed rapidly and debt is being reduced.
The working population has reached 67 per cent, and there is still ample room for further expansion of the workforce. Stable GDP growth is expected to continue in the future, and it is expected that India will become the third largest in the world. Total exports also recorded an average annual growth rate of 5.9 per cent from FY2015 to FY2024. In terms of policy, he also focuses on improving welfare systems for the poor, promoting women's advancement in society, and encouraging young people.
Discussion
- Moderator: Prof. Fukunari Kimura, President, IDE-JETRO
Prof. Kimura
Q: You say that there is further potential for private-sector exchanges to strengthen economic relations between Japan and India. What message do you have for the private sector?
Dr. Kumar
A: It is important for people to deepen their understanding of India's diversity and for us to grow together.
Session 1: “India-Japan Economic Relationship Revisited”
1.“India’s Economic Engagement with Japan: Status and Challenges”
Mr. R Madhu Sudan, Deputy Chief of Mission, Embassy of India
What kinds of changes are currently taking place in India? Among them are infrastructure development and the evolution of innovation. The business environment is improving, many start-up companies are emerging, and digital payments are becoming more common. Japan-India relations have been strong since the partnership was established in 2014 and have seen a lot of growth over the past decade. Japanese companies see India as a promising destination for expansion in the medium term. On the other hand, Japan is the fifth largest source of FDI to India, and while bilateral trade has been growing steadily, it is still India's 14th largest trading partner. Challenges include the lack of any changes to the comprehensive partnership agreement and limited market access. As for future initiatives, I believe it will be necessary to promote relations between Japanese prefectures and Indian states, the expansion of small and medium-sized enterprises, the dispatch of skilled workers to Japan, and people-to-people exchanges.
2.“Economic Activities of Japanese Firms in India: Status and Challenges”
Mr. Masashi Kono, Director of Southwest Asia, Research & Analysis Department, JETRO
Focusing on investment trends among Japanese companies, as of 2022 there were approximately 1,400 companies operating in India with around 4,900 bases. In terms of industry, half are manufacturing, and the other half are retail, information and communications, and accommodation/food services. 10 per cent of manufacturing is related to the automobile industry, and small and medium-sized enterprises account for about 15 per cent of the total. Automobiles are concentrated in the northern part of the country around major cities, but manufacturing industries, including automobiles, have also expanded into Bengaluru. Chennai is also seeing an expansion into automobile and other manufacturing industries, and is being considered as a future export base for Africa. A JETRO survey also revealed that 70 per cent of Japanese companies operating in India are making profits, and over 75 per cent are planning to expand their business in the future. Japanese companies are expanding into the retail and restaurant sectors as well as financial institutions, and there are also moves to expand exports and set up R&D facilities in India. The concerns of Japanese companies are shifting from improving salary levels to high employee turnover rates. Local companies have a 76 per cent share of the four-wheel EV market, and start-up companies have a share of the two-wheel EV market. The number of highly skilled Indian professionals residing in Japan has tripled, and many of the students are studying science and engineering. The country is attractive not only for manufacturing but also as an R&D center.
Discussion
- Moderator: Prof. Fukunari Kimura, President, IDE-JETRO
Prof. Kimura
Q: You mentioned regional diversity within India, and when it comes to direct investment, where you go is important. How should we view diversity?
Mr. Kono
A: It is important to look at India by region. Until now, the idea has been to manufacture and sell domestically, and there has been a tendency to set up operations in the vicinity of the capital, but on the other hand, if companies are considering exporting manufactured products in the future, Ahmedabad and Chennai will be attractive locations. Mumbai is a good location for test marketing in India.
Prof. Kimura
Q: You have traveled to all 47 prefectures. Did you find any clues to solve problems?
Mr. R Madhu Sudan
A: It was impressive to see such a large interest coming from the Japanese side. I felt that Japan is also diverse. Each has different priorities, but I think it is important for India's strategy to develop the human resources and environment that allows Indian skilled engineers to come to Japan.
Session 2: “India-Japan Economic Cooperation Through the Connectivity Initiatives”
1.“Economic Development and Connectivity Initiatives in Northeast India and Opportunities for India-Japan Cooperation”
Dr. Prabir De, Professor, RIS
The Northeast region accounts for around 3 per cent of India's total economic output, and is blessed with a great environment, great potential, prosperity and economic opportunities. This is a region with a promising future, with semiconductors growing. Infrastructure will lead growth, and new connectivity will support that growth. This will speed up the cycle of increased trade, competitive advantages, job creation and increased incomes. The industrial value chain seen in Northeast India includes pharmaceutical, textile and other industries, with various brands investing in the Northeast. Value chains are connecting across borders, creating new corridors and demanding seamless trade facilitation across borders. I cannot introduce everything, but there are many cross-border collaborations taking place. Particularly from the perspective of connectivity, there are corridor development, waterway linkages, rail connectivity, land port development, etc. The Government of India and the state governments will all work together as catalysts for connectivity in the Northeast. India has huge industrial potential. I think we can work together in three areas, starting with capacity building, digital capacity, and sharing data. Finally, two highlights. First of all, when looking at the relationship between Japan and India in general, the Act East becomes very important.
The second is to improve economic efficiency through digitalization. There seems to be a huge opportunity in this area, and it is important to involve the Northeast in this way. As for the value chain, Northeast will also create a production center. For example, if you want to go to Sikkim, there is an industrial cluster where about 40 pharmaceutical companies are making various products and they need facilitation of production. It is necessary to make full use of Japanese FDI. Cooperation in renewable energy will also be necessary.
This is necessary not only from the perspective of climate change but also disaster prevention. Technology can also be used in food processing and packaging techniques. Japanese funds will also be needed for skill development, vocational education, agricultural products, smart initiatives, media, and higher education.
2.“Lessons from the ASEAN Connectivity Initiatives-Implications for the Economic Development of the Bay of Bengal and the North-Eastern Region of India”
Mr. So Umezaki, Director, Economic Integration Studies Group, Development Studies Center, IDE-JETRO
Today, I would like to report on the lessons learned from connectivity projects in ASEAN, particularly their implications for the Bay of Bengal and Northeast India regions. ASEAN connectivity emerged separately from the movement towards ASEAN economic integration and the ASEAN Economic Community. Economic integration has expanded in scope since the 1990s, with the AFTA Free Trade Area at its core. Around 2007 and 2008, as the ASEAN Economic Community moved forward, there was a move to focus on "connectivity," integrating the cooperation being implemented by each ministry and agency to create a connectivity master plan and manage progress. Physical connectivity typically involves building roads, ports and airports, while institutional connectivity includes trade liberalization/FTAs, liberalization of services, liberalization of investment, and transport facilitation. As you know, East Asia and Southeast Asia have achieved remarkable economic development, and foreign direct investment by multinational corporations has played a major role in this process. There has been cooperation within ASEAN, but cooperation from countries outside the region, such as Japan, South Korea, and the United States, has played a major role in making these regions successful. Companies have invested, created a good trade environment, and built cross-border production networks known as global value chains. Even if a network is cut off due to a disaster, it can be quickly restored if a network had been built there before. The establishment of a network of regular transactions increases the incentive to institutionalize free trade and EPAs. Once these are established, rules-based relationships are created, reducing the risks in cross-border transactions and trade and investment relationships, making it possible to deepen relationships. Looking at South Asia, in terms of trade connectivity through global value chains, firstly, compared to other regions, South Asia has a stronger role in forward participation, in the role of inputting resources and materials, which is the same trend as African countries. Second, the share of intra-regional trade is very low, which is similar to the stage of development of South Asian countries. As we have discussed today, it is insufficient to view India as a single country. The third issue is that South Asia is in a one-sided relationship of dependency on countries in Southeast Asia, Northeast Asia, and Europe. To promote industrial development in South Asia, it is important to strengthen connectivity with outside the region. Southeast Asia is right next to South Asia, and has more advanced industrial development than South Asia, so the two regions have very good relations and it is meaningful to increase connectivity between the two regions. With regard to relations with countries outside the region, just as ASEAN has been making use of the multi-layered relationships it has with various countries, a similar approach seems possible in South Asia. I would like to point out that it is important to build a rules-based relationship.
Discussion
- Moderator: Mr. Isamu Wakamatsu, Director-General, ERIA Support Office, IDE-JETRO
Mr. Wakamatsu
Q: I would like to hear about the appeal of the Northeast compared to other regions and what industries offer business opportunities.
Dr. Prabir De
A: The Northeastern region has an international position and is blessed with human resources and clean water. It is also a promising area for the establishment of data-based semiconductor plants. It is also a place blessed with nature.
Mr. Wakamatsu
Q: Connectivity with ASEAN is attractive, but what points do you think need to be addressed to make the region even more attractive?
Mr. Umezaki
A: Since there are other countries in between, it can be said that the area is not well connected to mainland India. Although it is an area surrounded by mountains, I think there are some areas where air transportation can be improved.
Dr. Prabir De
A: The Northeast is a geographically important area, and if the situation in the surrounding countries improves, it is likely to attract more investment.
Closing Remarks
Prof. Fukunari Kimura, President, IDE-JETRO
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