Post Covid - 19 Prospects for India - Japan Economic Partnership

Abstract

Comprehensive economic engagement has been a core element of the Strategic and Global Partnership between India and Japan initiated in 2006. Japan is one of India’s major trading partners and the 3rd largest investor in the Indian economy. Importantly, Japan is also India’s largest bilateral developmental assistance donor, particularly for infrastructure development projects. However, in real terms bilateral trade and investment relations have remained below potential despite the economic complementarities. With the current COVID-19 pandemic generating severe challenges for the global economy, there is need for both India and Japan to enlist each other as an important partner in their respective economic recovery strategies and further strengthen bilateral economic engagement. In this context, this study examines the recent trends in India-Japan economic relations covering bilateral trade, investment and ODA; highlights the synergies between Japan’s COVID-19 related measures to support its companies to diversify their production sites and supply chains and the reform measures that India is undertaking to facilitate greater integration in regional and global supply chains in the Indo-Pacific region. The paper also underlines policy measures that will enable mutually beneficial economic collaboration between India and Japan to gain traction in post-COVID times.