During 1993-2003, Japan's global FDI averaged at $ 50 billion a year, of which India received $ 220 million a year or less than one-fourth of 1 per cent! Even at the regional level, India received just 2 per cent of Japanese FDI. (China's share was 10 times higher at 22 per cent).

Ironically in the pre-reform period, India's economic ties with Japan were the more developed among the Asian economies. Two-way trade often amounted to 10 per cent of India's total. By the early 1970s, several Japanese firms had entered into technical collaborations and/or joint venture arrangements with Indian firms.

During the decade since the Look East policy was launched, India's economic ties with east Asia made good progress. Trade grew substantially with three Asean economies - Indonesia, Malaysia and Thailand - as well as Korea, and their share in Indiia's trade doubled during 1993-2003.

Trade with Singapore, on the other hand stagnated and its share was halved. Unsurprisingly, trade with China and Hong Kong increased dramatically and its share in the country's trade expanded more than three-fold to 8 per cent during the period.

Besides increasing trade, a number of bilateral trade, investments and economic cooperation agreements have been made, especially with Thailand and Singapore, establishing broad-based economic ties with them. Discussions are underway for establishing similarly broad-based relationships with several other east Asian economies including China.

Unfortunately, however, the Look East policy did not find Japan on its radar and failed to deepen India's economic ties with it. Trade with Japan actually declined dramatically dropping its share to one-third of its level of 7 per cent in 1993. Admittedly, the Japanese economy stagnated during much of this period and offered limited room for big expansion.

However, it is difficult to attribute such precipitous decline in trade with India to slow Japanese growth, especially when Indian trade was never more than a tiny fraction (less than 0.5 per cent) of Japan's global trade.

Failure to involve Japan and a build broad-based economic relationship with it also resulted in closing the doors on Japanese foreign direct investment (FDI). Japanese FDI and technology have been a driving force behind the economic growth of several Asian economies since the 1960s, giving rise to the so-called "flying geese" pattern of growth.

Regionally, the two Asian giants will strive for closer collaboration for peace and stability, while on the global stage, they will cooperate in environment, energy, non-proliferation and security.

On the economic side, the two sides pledged to increase and diversify trade. A joint study group to be set up soon will submit a report by end-2005 to improve linkages and study the feasibility of an economic partnership agreement.

Special effort will be made to encourage top Japanese companies to invest in India. Also, negotiations for a tax treaty will be concluded at the earliest. The joint statement also called for enhanced defence dialogue and service to service cooperation between the Coast Guard and the Indian Navy and Maritime Self-Defence forces, including joint exercises against piracy.

The joint committee on science and technology will be revived for cooperation in nano-science, robotics and alternative energy.

A happy outcome of the Koizumi visit is that the two Asian giants are waking up to the potential of working together, and the areas of growth have been clearly outlined.


Missing Japan from India`s `Look East` policy, Vishwanath Desai, Business Standard
 
 As China fear looms large, Japan looks to India  Financial Express

8-fold plan to boost ties with Japan, Sify

Japan and India move to deepen trade ties Financial Times