PM Modi’s recent visit to Japan for the G7 Hiroshima Summit 2023 is being considered as an important milestone in India’s economic transformation. (Image: Reuters)
Japan is actively encouraging its companies to shift their manufacturing operations from China to India
According to the Department of Commerce, Japan is making significant investments in India and has emerged as one of the largest investors in the country with a cumulative foreign direct investment (FDI) of US$ 17.15 billion between April 2022 and January 2023.
The East Asian country has been actively encouraging its companies to shift their manufacturing operations from China to India.
“India’s economy has been remarkably resilient to a deteriorating external environment, and strong macroeconomic fundamentals position it well compared to other emerging market economies,” said Auguste Tano Coume, World Bank Country Director in India.
In this context, the recent visit of PM Modi to Japan for the G7 Hiroshima Summit 2023 is being considered as an important milestone in India’s economic transformation.
India’s exports to Japan during the financial year (FY) 2022-23 stood at US$ 5.18 billion, while imports from Japan stood at US$ 11.97 billion. According to the exchange rate, the Indian currency experienced an appreciation rate of 12.5 per cent against the Japanese yen between April and December 2022.
The data on imports from Japan to India showed a compound annual growth rate (CAGR) increase of 1.6 percent between FY12 and FY2022, while India’s exports to Japan saw a decline of 0.3 percent.
According to the Department of Commerce, bilateral trade or import-export activities between India and Japan reached their highest point in the last decade since the fiscal year 2011-12, with a total value of US$ 20.57 billion.
In the last five years, the bilateral trade or import-export figures between India and Japan have been:
| financial year | bilateral trade volume |
| FY 2017-18 | US$15.71 billion |
| FY 2018-19 | US $ 17.63 billion |
| FY 2019-20 | US$16.95 billion |
| FY2020-21 | US $ 15.93 billion |
| FY2021-22 | US$ 20.57 billion |
According to the data provided by India’s Ministry of Commerce, the total imports from India to Japan (including both goods and services) during April to January period in the financial year 2022-23 stood at US$ 11.97 billion, while imports from Japan to India during the same period Exports of the same period were recorded at US$ 5.18 billion.
The figures of exports from India to Japan in the last five years in billion US dollars are as follows:
| Year | Exports from India to Japan (in US$ billion) | Imports from India to Japan (in US$ billion) |
| FY 2017-18 | 4.73 | 10.97 |
| FY 2018-19 | 4.86 | 12.77 |
| FY 2019-20 | 4.52 | 12.43 |
| FY 2020-21 | 4.43 | 10.9 |
| FY 2021-22 | 6.18 | 14.39 |
India and Japan established bilateral relations in 1952, marking the beginning of their diplomatic relations. On 16 February 2011, India and Japan agreed to a Comprehensive Economic Partnership Agreement (CEPA), which came into force on 1 August the same year. Since the implementation of the CEPA, the economic relations between the two countries have been on the path of continuous development.