Tokyo: India and Japan on Friday infused new energy into their economic ties by agreeing to launch negotiations on a defining economic partnership pact and initiating a slew of measures to accelerate their cooperation in the area of energy security.
Describing economic engagement as the "core element of their strategic partnership," and linking it with growth and stability in the region, Asia's two leading economies decided to conclude a Comprehensive Economic Partnership Agreement (CECA) in two years.
"Investment, both by government and private sector companies, will definitely increase. The economic partnership agreement will give a big impetus to realize the full potential of our economic relationship," Japanese premier Minister Shinzo Abe told reporters at a joint press interaction with Prime Minister Manmohan Singh.
Underlining the common value systems that bind the two vibrant democracies, Abe admitted that till very recently the Japanese had "little knowledge of India," but were now waking up to the potential of Asia's second-fastest growing economy.
The joint statement issued after talks between Manmohan Singh and Abe noted the decision of the two leaders to launch a ‘Japan-India Special Economic Partnership Initiative’ to promote enhancement of investment from Japan to India and help develop India's infrastructure and manufacturing capacity.
The key elements of the new economic partnership include promotion of a Delhi-Mumbai industrial corridor, supported by a freight corridor along the same route, cooperation in setting up a multi-product Special Economic Zone (SEZ) in India, a ‘One Village, One Product’ programme, and the development of small and medium enterprises through a Business Support Centre.
The bilateral cooperation in the energy sector also received a big boost with Japan agreeing to help developing power projects in India.
Specific projects identified for cooperation in the area included the 4,000 MW Coastal Ultra Mega Power Project at Chayyur in Tamil Nadu and the 3,000 MW Lohit Hydroelectric Project in Arunachal Pradesh.
Earlier, Manmohan Singh had told leading Japanese business leaders to "breathe a new life" into traditional ties between the two countries.
"Japan must regain its historic status as India's most important business partner in Asia. In the years ahead, we wish to focus on building a much deeper and wider relationship with Japan's business and industry," Manmohan Singh said at a lunch hosted by the Japanese apex business chambers in association with their Indian counterparts.
He, however, added that bilateral economic relations "fell far short of the potential" and exhorted Japanese companies to "reverse this situation."
"I have been surprised to see Japan lose ground in India during the 1990s to other East Asian and Southeast Asian economies, both in terms of foreign investment flows and trade flows," Manmohan Singh said hours ahead of his meeting with his Japanese counterpart Abe.
"China's trade with India is nearly three times that of India's trade with Japan and (South) Korea's trade with India is almost equal to Japan's role they had played in the development of automobile and other industries in India," he said.
Underlining new opportunities in "a youthful, confident and dynamic India," Manmohan Singh underlined that "profit prospect of Japanese manufacturing companies was the best in India as compared to other Association of South East Asian Nations (ASEAN) countries."
"More than 90 per cent of such companies in India were planning to expand operations in the next one-two years," he said. "I urge you to weigh the initial problems of entry against the long-term profitability and stability of doing business in India," he added.
Underlining India's rising stature as a knowledge power and IT hub, Manmohan Singh said knowledge-based industries offer tremendous opportunities for partnership between Japan and India.