PM Modi’s recent visit to Japan for the G7 Hiroshima Summit 2023 is regarded as a significant milestone in India’s economic transformation. (Image: Reuters)
Japan has been actively encouraging its companies to relocate their manufacturing operations from China to India
Japan is making significant investments in India and has emerged as one of the country’s largest investors with a cumulative Foreign Direct Investment (FDI) amounting to US$ 17.15 billion between April 2022 and January 2023, according to the Department of Commerce.
The East Asian country has been actively encouraging its companies to relocate their manufacturing operations from China to India.
Auguste Tano Kouame, World Bank’s Country Director in India said, “India’s economy has been remarkably resilient to the deteriorating external environment, and strong macroeconomic fundamentals have placed it in good stead compared to other emerging market economies.”
In this context, PM Modi’s recent visit to Japan for the G7 Hiroshima Summit 2023 is regarded as a significant milestone in India’s economic transformation.
While India’s exports to Japan amounted to US$ 5.18 billion, imports from Japan stood at US$ 11.97 billion during the Financial Year (FY) 2022-23. As per the exchange rate, the Indian currency experienced an appreciation rate of 12.5 percent against the Japanese Yen between April and December 2022.
The import figures from Japan to India exhibited a Compound Annual Growth Rate (CAGR) growth of 1.6 percent, while India’s exports to Japan experienced a decline of 0.3 percent between the financial years FY2012 and FY2022.
As per the Department of Commerce, the bilateral trade or import-export activities between India and Japan reached their highest point in the last decade since FY2011-12, with a total value of US$ 20.57 billion.
Over the past five years, the bilateral trade or import-export statistics between India and Japan have been:
| Financial Year | Bilateral Trade Volume |
| FY2017-18 | US$ 15.71 billion |
| FY2018-19 | US$ 17.63 billion |
| FY2019-20 | 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 overall imports (including both merchandise and services) from India to Japan during the period from April to January in FY 2022-23 amounted to US$ 11.97 billion, while India’s exports to Japan during the same period were recorded at US$ 5.18 billion.
The export figures from India to Japan over the last five years, in US$ billion, 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 ties in 1952, marking the beginning of their diplomatic relationship. On February 16, 2011, India and Japan agreed to a Comprehensive Economic Partnership Agreement (CEPA), which came into effect on August 1st of the same year. Since the implementation of the CEPA, the economic relationship between the two countries has been on a trajectory of continuous deepening and growth.