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Japan, India Pursue Sweeping Trade Pact

Japan and India are pledging to substantially increase trade, with a special emphasis on small and medium-sized businesses. Officials of both countries, meeting in Japan, are preparing for negotiations on an economic partnership agreement.

Indian officials visiting here say they will soon start negotiating with Japan on a sweeping economic partnership agreement.

The proposed pact - which officials say would be more comprehensive than a free trade agreement - is meant to substantially boost the relatively paltry $5 billion in annual trade between India and Japan.

Indian Commerce and Industry Minister Kamal Nath has spent this week meeting with Japanese officials. On Friday, he told reporters that a natural combination would be India's skilled engineers and technicians utilizing Japanese technology.

"Japan has a much higher age profile. Japan has a shrinking work force. India has a large, skilled and young work force," said Nath. "The work force of India and the technology and innovation of Japan creates a willing partnership."

The commerce minister says he particularly wants to attract small and medium-sized Japanese enterprises to India. He says infrastructure improvements and deregulation are high priorities for his government in the effort to double Indian-Japanese trade in three years.

Indian officials also announced a plan to create an 800-hectare industrial park in their country, as the centerpiece of what would effectively be a small Japanese city. The community would be complete with state-of-the art health care, schools, restaurants and entertainment catering to expatriates from Japan.

Japanese trading company Mitsui is drawing up the plan and the Indian government will help to acquire the land, once a location has been found.

India wants to have the economic partnership agreement ready for signing when Prime Minister Manmohan Singh visits Japan, a trip tentatively scheduled for December.

One of the most difficult areas for the agreement will involve - as it does with any such deal with Japan - agriculture.

Nath says India understands Japan's sensitivities in the sector, but many agriculture products from his country should not pose concern, because they are not widely grown in Japan.

"The mangoes do not affect the Japanese farmer," said Nath. "Similarly, there are many areas in herbs and spices which don't affect the Japanese farmer. Some of the fruits and vegetables don't affect the Japanese farmer. There are so many areas which have no sensitivities and, in the end, will do good to the Japanese consumer. The Japanese consumer will have a wider choice."

Japan is the fourth largest foreign investor in India. Tokyo has been seeking better relations with New Delhi as a counterweight to China's growing ties with India.


Steve Herman

A veteran journalist, Steven L Herman is the Voice of America Asia correspondent.
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