INDIA-JAPAN HOLD FINANCE DIALOGUE

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Context:

• Masato Kanda, Vice Minister of Finance for International Affairs, Japan, and Mr. Ajay Seth, Secretary, Department of Economic Affairs, Ministry of Finance, held the first India-Japan Finance Dialogue.

 

More on the news:

• In view of the growing importance of India-Japan relations in recent years, the dialogue on India-Japan financial cooperation, which had been held at the level of Deputy Director-Generals, was upgraded to the level of Vice Minister/Secretary.
• The participants exchanged their views on the macroeconomic situation, financial system, financial digitalization and investment environment in both countries, and confirmed that both sides will continue to work closely together as they hold presidency of G20 and G7 next year.
• Both sides agreed to continue discussions for further promoting financial cooperation and strengthening bilateral relations, and agreed to explore holding the next round of the Dialogue in Tokyo.

 

Highlights of Indo-Japan relationship:

• The friendship between India and Japan has a long history rooted in spiritual affinity and strong cultural and civilizational ties.
• India’s earliest documented direct contact with Japan was with the Todaiji Temple in Nara, where the consecration or eye-opening of the towering statue of Lord Buddha was performed by an Indian monk, Bodhisena, in 752 AD.
• In contemporary times, among prominent Indians associated with Japan were Swami Vivekananda, Gurudev Rabindranath Tagore, JRD Tata, Netaji Subhash Chandra Bose and Judge Radha Binod Pal.
• The Japan India Association was set up in 1903, and is today the oldest international friendship body in Japan.
• Today, India is the largest democracy in Asia and Japan the most prosperous.
• Political Relations:
• In the first decade after diplomatic ties were established in 1952, several high level exchanges took place.
• A transformational development in the economic history of India was Suzuki Motor Corporation’s path breaking investment in India.
• A test of the reliability of Japan as a friend was witnessed in 1991, when Japan was among the few countries that unconditionally bailed India out of the balance of payment crisis.
• In 2000, the Japan-India Global Partnership in the 21st century was launched.
• In 2006, the relationship was upgraded to a Global and Strategic Partnership with the provision of annual Prime Ministerial Summits.
• A Comprehensive Economic Partnership Agreement between Japan and India was concluded in 2011.
• Economic and Commercial Cooperation:
• Japan is regarded as a key partner in India’s economic transformation.
• Japan's interest in India is increasing due to a variety of reasons including India's large and growing market and its resources, especially the human resources.
• The India-Japan Comprehensive Economic Partnership Agreement (CEPA) that came into force in August 2011 is the most comprehensive of all such agreements concluded by India and covers not only trade in goods but also Services, Movement of Natural Persons, Investments, Intellectual Property Rights, Custom Procedures and other trade related issues.
• Japan has been extending bilateral loan and grant assistance to India since 1958, and is the largest bilateral donor for India.
• Japanese ODA supports India’s efforts for accelerated economic development particularly in priority areas like power, transportation, environmental projects and projects related to basic human needs. The Ahmedabad-Mumbai High Speed Rail, the Western Dedicated Freight Corridor (DFC), the Delhi-Mumbai Industrial Corridor with twelve new industrial townships, the Chennai-Bengaluru Industrial Corridor (CBIC) are all mega projects which will transform India in the next decade. Delhi Metro Project has also been realized with Japanese assistance. In 2017-18, ODA disbursed was JPY 246.32 billion.
• In FY 2017-2018 India-Japan bilateral trade reached US$ 15.71 billion. Exports from Japan to India during this period were US$ 10.97 billion and imports were US$ 4.74 billion. The trade totaled to US$ 14.90 billion during April 2018 –February 2019. Exports from Japan to India during this period were US$ 10.05 billion and imports were US$ 4.85 billion.
• India has been ranked as the one of the most attractive investment destination in the survey (2018) of Japanese manufacturing companies, conducted by the Japan Bank for International Cooperation (JBIC).
• Cooperation in Skill Development:
• Under the MoC signed in 2016 to train 30,000 shop floor leaders, Japanese companies have established ten Japan-India Institute of Manufacturing (JIM) in India and 3 Japanese Endowed Courses (JEC) in Indian Engineering Colleges.
• Cooperation in Railway Sector:
• Mumbai-Ahmedabad High Speed Railway is a very important area of cooperation between India and Japan in Railway Sector.
• A new High-Speed Rail Training Institute is being built at the National Academy of Indian Railways (NAIR) campus in Vadodara.
• Science & Technology and Cultural Cooperation:
• India-Japan S&T cooperation was formalized through an Inter-Governmental Agreement signed in 1985.
• Bilateral S&T cooperation began in 1993 with the establishment of the India-Japan Science Council.
• In 2006, DST initiated a value-based partnership on the principles of 'reciprocity and co-funding with the Japan Society for the Promotion of Science and Japan Science and Technology Agency.
• Recent initiatives include establishment of three India-Japan Joint Laboratories in the area of Information and Communication Technology (“Internet of Thing, Artificial Intelligence and Big Data Analytics”).
• A cultural agreement was signed between India and Japan on 29 October 1956, whichcame into effect on 24 May 1957.
• A year-long Festival of India in Japan 2014-15 was held from October 2014 to September 2015.
• Indian Community:
• The arrival of Indians in Japan for business and commercial interests began in the 1870s at the two major open ports of Yokohama and Kobe.
• In recent years, there has been a change in the composition of the Indian community with the arrival of a large number of professionals, including IT professionals and engineers working for Indian and Japanese firms as well as professionals in management, finance, education, and S&T research.
• There are growing links between Indian states and Japanese prefectures. As of now 7 Indian states and 3 sister cities/regions have partnered with Japanese prefectures and cities through MoUs to cooperate under diverse sectors.

 

Importance of India – Japan Relations:

• Wide range of interests: regional cooperation, maritime security, global climate, and UN reforms.
• Share several common ideals: democracy, the rule of law, and human rights
• India is seeking massive investments in its infrastructure sector and Japan is a major investor.
• Japan’s technological and economic prowess could accelerate India’s development by transforming its infrastructure and manufacturing sectors.
• India is a big market for Japanese companies.
• Japan’s interest in India is increasing due India’s large and growing human resources.
• Share convergent interests under Indo-Pacific and Quad.
• India’s Act East Policy and Japan’s “Free and Open Indo-Pacific Strategy” converge in NER
• Both countries are keen to extend their cooperation to the larger Indo-Pacific region—including the African continent.
• The rise of China has been an important factor, while India’s growing closeness with the US has also played a role, as the US and Japan already have a close alliance.

 

Challenges:

• Varying stands on issues like Ukraine conflict
• The trade ties have remained underdeveloped.
• The two sides have also been unable to collaborate in the defence sector in spite of huge potential.
• Both had diverging interest with respect to economic issues like on E-commerce rules, Regional Comprehensive Economic Partnership
• India has challenge of maintaining balance between Quad and BRICS

Way Forward:

• Economic front needs to be strengthened wherein demographic dividend of the India and other Asian countries can be deployed to benefit Asia as whole.
• A roadmap with actionable items, such as by stepping up coordination in counter-terrorism, cyber security, and disaster relief.
• Japanese green technologies can help India tackle pollution.
• Smooth implementation of the high speed rail project linking Ahmedabad and Mumbai.
• Defence: Both countries should engage on possibilities of India acquiring Japanese technology and on cooperative research.
• A technologically deficient India has much to gain from a relationship with a country like Japan.
• Efforts should be done to keep the Indo-Pacific multipolar.

 

https://www.pib.gov.in/PressReleasePage.aspx?PRID=1834555