Trade relations:

Since 1952, Japan and India have maintained diplomatic relations and enjoyed cordial relations based on trade and economic and technical cooperation. The focus of Japan's economic relations with India switched from the pre-world war-II import of cotton to the import of iron ore. The relations developed steadily as Japan's imports of ore and exports of manufactured products increased. Japan participated in the Consortium Meeting of India's creditor countries hosted by the World Bank in the year 1958, and embarked on the full-scale assistance to India that has continued to the present.

The relations between India and Japan have been quiet good since the fiscal 1986. The number of Jaanese nationals residing in India was 2,050 (Oct., 1999) while the number of Indian nationals residing in Japan: 9,067 (Dec., 1999) is a good indicator of cooperation between the two nations.

Economic Cooperation between the two nations has been buoyant with Japan's total loans to India amounting to $4,239.0 million in 2004, grant aid were of the order of $ 399.2 million, while technical cooperation totalled to an amount of $ 179.5 million.

With India's push towards greater economic liberalization policies, Japanese corporations' interest in India has risen, and private-sector investment has increased dramatically and it is expected to rise further in future. Official Developmental Assistance(ODA ) is provided to infrastructural sectors like telecommunication, power and transport. Of course, over the years ODA has expanded beyond infrastructure. Example: Recent ODA packages include: Delhi Metro Railway, Yamuna Action Plan and some projects in the Power sector. Japan's assistance under ODA since fiscal 1990-91 to 2001-02 cumulates at 977.14 bn. Majority of the Japanese companies surveyed said that they are making profits and are "positively considering further expansion of their operations".

SOCIAL CULTURE: Impact of FDIs

For Indian investors, investing in Japan is pretty alluring. Japan, is rated as world's second largest market. Apart from highly skilled human resources, Japan offers innovative technologies. As far as the infrastructure back-up is concerned, the transportation network is rated as one world's bests.

The foreign companies that are doing business in Japan have posted high profits.The Government of Japan provided Yen 1250.04 million for projects in FY 2003, in which India became the largest recipient of the Japanese ODA. Till the FY 2003-04, Japan has provided approximately Yen 2193 billion on commitment basis as ODA to India.

The drawback of Indian economy is that while Japan is planning for the structural reforms, india is still planning for basic reforms. the joint declaration of Dec 2001 has provided the base for the things to shape up

Japanese PM has agreed to give financial support in build $ 5 billion rail corridor between New Delhi and Mumbai and Delhi and Hawrah to speed up infrastructure in India. The corridor will allow multimodal, high axle load freight trains, with a fully computerized traffic control, to run from one end of the country to another. The project will be under Japans Special Terms for Economic Partnership (STEP) scheme.

Source: http://www.economywatch.com/world_economy/japan/indo-japan-trade-relation.html