Date:18/03/2005 URL: http://www.thehindubusinessline.com/2005/03/18/stories/2005031800680900.htm

Back India-Japan bilateral trade must be FDI-based, says Kamal Nath

Our Bureau

New Delhi , March 17

THE Minister of Commerce and Industry, Mr Kamal Nath, today said the emphasis of India-Japan bilateral trade should be foreign direct investment-based and not official development assistance (ODA)-based.

"India is one of the largest ODA recipients from Japan. However, in the changed context of our desire for seeking a new economic partnership, it is important that we shift the emphasis of India-Japan relationship from ODA-based to FDI-based," the Minister said, addressing a symposium on "Japan and India: Challenges and Responsibilities as Partners in the 21st Century in Asia" organised by the Confederation of Indian Industry.

Speaking in the presence of Mr Yoshiro Mori, former Japanese Prime Minister, Mr Kamal Nath said close cooperation between the two countries had a strategic significance.

He said being the two largest democracies in Asia, there was a need to forge a stronger partnership through economic cooperation, trade and investment.

The Minister pointed out that approvals of Japanese FDI in India during the period 1991-2004 have been in the order of $3.2 billion, which was around 4.8 per cent of total Indian approvals for all FDI. But of this, the actual inflow of investment from Japan was around $1.8 billion.He said Japanese investments in India are very low despite a number of successful Indo-Japan ventures such as Suzuki-Maruti, Hero-Honda, Toyota-Kirloskar.

According to the Minister, there was a vast potential for higher levels of Japanese investment in India in a variety of sectors such as infrastructure, telecom, power and construction.On the present level of India-Japan trade, he said that it was disappointing to note that it was only $4 billion during 2003-04, a growth of 18 per cent over what it was in 2002-03.

Later during the day, Dr Rakesh Mohan, Secretary, Department of Economic Affairs, Ministry of Finance, said that overall savings in the Asian region is expected to go up, while savings in the developed countries would register negative growth.

He was of the view that accelerated investment taking place in Asia at present, was due to the fast economic growth in several countries. This would entail Asian economies to establish closer economic linkages, particularly, as a reaction to the regional groupings in Europe and Latin America.