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Japan_India

The pandemic may rise for the India-Japan partnership

The spread of the coronavirus outbreak, the world’s largest pandemic in more than a century, is likely to change the world order, irreversibly altering relations between nations. Some may drift apart, and some may conjoin. In the case of India and Japan, it can only push the two nations closer together.

Looking at the post-COVID relation

On 10 April, when the heads of the two nations – Prime Minister Narendra Modi and Japanese Prime Minister Shinzo Abe – held a telephone debate on the situation resulting from the pandemic, one of the key points was how the two countries can work together to find solutions to the problems that will arise in the post-COVID-9 world.

“The India-Japan Special Strategic & Global Partnership can help develop new technologies and solutions for the post-COVID world – for our peoples, for the Indo-Pacific region, and for the world,” Modi said later in a tweet. _ India Inc

No further details of what this means was shared, but less than a week later, Abe announced a corpus of $2.2 billion (240 billion yen) to help Japanese firms decouple from China and move their supply chain network elsewhere. This immediately puts the focus on India, where Japanese companies have strongholds in sectors such as automotive and consumer sustainability.

Shutting Out China

The Chinese fear is not one-sided either. India has updated its FDI strategy to include China in the list of countries where any project will need government approval. The aim was to foil any effort by greedy Chinese businesses to take over Indian firms that would be in the spotlight under the economic repercussions of the pandemic and in the spotlight. At the same time, it encourages other nations, including Japan, to fill the void, especially in the start-up area where China is a major investor.

“It is an opportunity for others to step in as fear psychosis about China is at a crescendo,” said an industry veteran who works with a consumer durable firm. _ India Inc

“India is looking to reduce its trade deficit with China and restrict investments from the country. Japan is also looking at getting rid of some of its engagements with China. It makes perfect sense for both to look at each other.”_ India Inc

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Ties between the two countries have been on the rise in the last few years, even though the figures do not represent that. Bilateral trade amounted to just over $17.63 billion (2018-19), leaving Japan just out of the top 10 countries that do most business with India. But the ties are getting tighter. India has been one of Japan ‘s main recipients of development assistance for many decades, and billions of yen have been converted into ventures of vital significance to India, including the Delhi Metro and the proposed $90 billion New Delhi Mumbai Industrial Corridor.

New Indo-Japan order

Japan is now one of the major FDI investors in India responsible for more than $25.2 billion ( Rs 193,000 crore) or 7.2 per cent of total FDI inflows to India.

The pandemic is expected to disrupt the Indian economy, and a number of businesses will be in desperate need of resources and money once the epidemic is over. Any other country will still have its challenges, and there may not be many of them with extra cash, but Japan may be one of them. That is why many countries in India have already made efforts to attract investment. For eg, the Gujarat government is planning a bouquet of rewards and sops to draw Japanese companies seeking to migrate from China. It also has a dedicated Japanese site, which has a range of vendors that produce parts for these businesses.

The state has now earned substantial investments of over $2 billion ( Rs 15,700 crore) from Japan and has passenger car industry leaders Maruti Suzuki and two-wheeler giant Honda. It was only $104.5 million (Rs 800 crore) in 2013.

“We are offering incentives and subsidies for manufacturing units across 30+ sectors. With excellent roads across the state, we have port connectivity with 48 large ports handling over 450 million tonnes cargo. With 17 operational airports and airstrips with two international airports, we have smooth air connectivity,” says Manoj Das, the state’s principal secretary. _India Inc

Out of the wreckage of the pandemic, the sun will only rise for the relationship between India and Japan.