Indo-Japanese Economic Co-Operation: Problems and Prospects

Abstract

India and Japan are two economic partners in Asia. Both are important countries on the eastern and western flanks of Asia; while India is the second largest in the world in terms of population, Japan is one of the most economically advanced in the world. During the last quarter century or so, they have made sincere efforts at various levels to consolidate their complementary relationships. They have also endeavoured to diversify and intensify their economic interests by means of trade, industrial collaboration and investment. This bilateral partnership has developed rather slowly and there is obviously great scope for its further diversification and intensification. What is needed in this regard is an atmosphere of warmth, sincerity and reciprocity.

Whilst Japan's imports from India declined from 8.55 per cent of its total imports in 1951 to 0.8 per cent in 1977, its exports to India also declined from 7.39 per cent of the total exports to 0.59 per cent during the same period.¹ Similarly, Japanese investments in foreign collaboration in India amounted to only $ 32 million on 31 March 1979 or about 0.1 per cent of their total investment abroad of about $ 27 billion on that date. Japan's share in cases of foreign investment approved (capital/technology) by India during the 1957–1979 period totalled 502 collaborations out of a total of 5706 or only 8.8 per cent. Nevertheless, Japan is more important for India than vice versa. It is one of India's important trading partners. In 1978–79, India's exports to Japan totalled $ 743 million or 10 per cent of the total exports. Similarly, imports from Japan amounted to $ 705 million or about 6.7 per cent of total imports.²

Indo-Japanese economic co-operation could develop further from its present level in areas of trade, investment, technology transfer, collaboration in third countries, and multilateral issues figuring on the agenda of the North-South dialogue, the United Nations and its agencies, the World Bank and the International Monetary Fund (IMF). The scope of this paper is confined to an examination of the problems and prospects of Indo-Japanese economic cooperation in the fields of trade, investment and collaboration in third countries.