The Hindu : National : CII for greater India-Japan trade

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Monday, Apr 25, 2005

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CII for greater India-Japan trade

Special Correspondent

Indian exports is heavily `skewed'

NEW DELHI: Ahead of the high-profile visit of the Japanese Prime Minister, Junichiro Koizumi, to India on April 28, the Confederation of Indian Industry (CII) has called for greater bilateral cooperation in the private sector and in various economic fields between the two Asian giants.

According to a CII paper titled `India-Japan: The Road Ahead', although 45 per cent of Japan's international trade is with Asia, India's share is a meagre one per cent while China retains the largest share at 34 per cent of the Asian market.

The paper has observed that as a destination of exports also, Japan's share has been steadily declining. ``It was the second largest destination of India's exports in the early Nineties, next only to the United States. It has almost halved to 2.68 per cent of India's total exports in 2003-04 from six per cent in 1996-97.''

The share of India-Japan trade in India's total trade has also come down from 5.7 per cent in 1996-97 to 3.08 per cent in 2003-04.

The paper has, however, pointed out that assuming India's total trade maintains a cumulative aggregate growth rate (CAGR) of 14.29 per cent, India-Japan trade will have to grow at a CAGR of 27.3 per cent to achieve a six per cent share in India's total trade by 2010.

Besides, the CII paper has also observed that India's export basket for Japan is heavily ``skewed.'' The top four categories constituted more than 50 per cent of the exports in 2003-04 and the next six categories accounted for 21 per cent of the total exports to Japan. India's top 10 export commodities to Japan are natural cultured pearls, gems and jewellery, fish and crustaceans, molluscs and other aquatic invertebrates, ores, slag and ash, mineral fuels, minerals oils, organic chemicals, cotton, clothing accessories, nuclear reactors, opticals and photographic accessories.

Slowdown impact

The paper attributes the slide in bilateral trade from 1997 onwards to the slowdown of the global economy and in part due to the slowdown of the Japanese economy.

``Things should certainly improve, now that Japan's economy shows clear signs of recovery.''

For a significant step-up in trade, the paper has recommended for exports to Japan such commodities as edible fruits and nuts, cereals, oilseeds, mineral fuels, mineral oils, organic chemicals, pharmaceutical products, plastics and articles thereof, articles of leather, saddlery and harness, footwear, gaiters and iron and steel.

On Japanese foreign direct investment (FDI) to India, the paper has said that the sectors attracting maximum Japanese investment are transportation, telecommunications, fuel, chemicals, trading and electrical equipment.

The sectors identified for3 future collaboration include information technology (IT), biotechnology, human resource development, agriculture, financial sector, tourism and environment.

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