India to remain biggest Japanese aid getter

India will remain the biggest recipient of Japan's official development assistance (ODA) in the near future.

Since Japan's first ODA to India in 1958, the country has received monetary aid worth Rs 89,500 crore so far, said Noro Motoyoshi, Japanese consul general in Kolkata, at the Bengal National Chamber of Commerce & Industry (BNCCI).

This year the loan assistance to India was up by more than 18% compared to last year at Rs 6916 crore. Transport, environment, and energy will remain the thrust areas for Japanese assistance, he added.

Kolkata has a huge potential to attract investments in the infrastructure sector, mainly in the form of joint ventures, Motoyoshi said.

However, as political relationships are not sustainable without people-to-people exchange, cultural exchange was now a priority, Motoyoshi said. This will extend to the areas of tourism, and educational collaborations.

Together with promoting tourism, Japan aimed to hike the number of Indians learning Japanese in India from 11,000 currently to 30,000 by 2010. While direct flights between the two countries had increased from eight in 2003 to 20 in October 2007, there was no direct flight from Kolkata, he added.

As for the dedicated rail freight corridor project, the feasibility report had been submitted to the ministry of railways by Japanese International Cooperation Agency (JICA) in October 2007, he said.

A strong and dynamic India is the interest of Japan, he mentioned. One of the major reasons behind this was India's impressive growth rate that is estimated to continue over the next ten years, together with the market size, as well as India's potential to become a world-class manufacturing hub, he said.

Japan has identified India as a partner in the region with similar values and interests, and this partnership fits in well with Japan's concept of a 'broader Asia' with free flow of goods and services, Motoyoshi said.

Japan's foreign direct investment (FDI) to India grew nearly five times from $130 million in 2003 to $520 million in 2006.

This year FDI was further up 4%. Total bilateral trade volume also doubled during the period from $4.6 billion in 2003 to $8.6 billion in 2006. It is expected to touch $ 10 billion by the end of 2007 fiscal and the target is to take bilateral trade up to $20 billion by 2010.

With the number of Japanese companies doing business in India doubling during the same period, small and medium enterprises (SME) are also looking at increasing investment in India, Motoyoshi said. Currently, nearly 140 Japanese companies are doing business in India. This has eventually brought about diversification of the investment sectors to include pharmaceuticals, food processing, and oil & gas.

Motoyoshi sounded upbeat on the signing of the Indo-Japan economic partnership agreement (EPA) for which negotiations are on between the two countries. After its signing, EPA is expected to account for nearly 50-60% of the total gross democratic product (GDP) in Asia. Japanese companies in the Association of Southeast Asian Nations (ASEAN) will have more opportunities to invest in India through the Indo-Japan EPA, as well as the Indo-Asean Free Trade Agreement (FTA), he added.