Maharashtra’s Startups, Automotive, Pharma Sectors To Receive Booster Shot From India-Japan FTA
The India-Japan Free Trade Agreement (FTA) is a bilateral trade agreement between the two countries, aimed at promoting trade and economic cooperation. This agreement was signed in 2011 and has since been implemented, resulting in significant benefits for both countries. The FTA has been successful in increasing trade between the two countries, with Japanese exports to India increasing by nearly 19 per cent in the first year after the agreement was signed (Source: Ministry of Commerce and Industry, Government of India).
One of the key areas of cooperation under the India-Japan FTA is in the field of trade and investment. In recent years, there has been a significant increase in the level of trade between the two countries, with Japan emerging as one of India's top trading partners. According to data from the Ministry of Commerce and Industry, total bilateral trade between India and Japan stood at USD 20.57 billion FY 2021-22. India’s export to Japan during FY 2021-22 stood at USD6.18 billion and imports stood at USD14.39.
Another area of cooperation under the FTA is in the field of infrastructure development. Japan has been a key partner for India in its efforts to modernise and expand its infrastructure, providing financial and technical assistance for projects such as the Delhi-Mumbai Industrial Corridor, the Chennai-Bengaluru Industrial Corridor, and the Dedicated Freight Corridor.
Big gains for Maharashtra from the FTA
The scope for industries in Maharashtra in relation to the India-Japan FTA is significant. Maharashtra is India's largest state in terms of gross domestic product (GDP), with a GDP of over USD 400 billion in 2019-20. It is home to several key industries, including manufacturing, automotive, and pharmaceuticals. The FTA provides opportunities for these industries to expand their operations and tap into the Japanese market.
The state has seen a significant increase in Japanese investment in recent years, with Japanese companies setting up operations in a range of sectors, including automobiles, engineering, electronics, and chemicals. According to data from the Maharashtra Industrial Development Corporation (MIDC), Japanese investment in the state stood at USD1.25 billion in 2019-20, an increase of 13 per cent over the previous year.
Some of the key Japanese companies that have invested in Maharashtra include automotive giants, engineering firms, and electronics companies. These companies have set up manufacturing facilities in the state, creating employment opportunities and contributing to the growth of the local economy.
The automotive industry in Maharashtra is well-positioned to benefit from the India-Japan FTA. Japan is a world leader in automotive technology, and Indian companies can leverage the FTA to access this technology and enhance the quality of their products. In 2019-20, the automotive industry in Maharashtra contributed over $40 billion to the state's economy. In turn, Japanese companies can take advantage of the FTA to set up operations in Maharashtra and benefit from the state's strong automotive industry.
The pharmaceutical industry in Maharashtra is also poised to benefit from the India-Japan FTA. Japan is a major player in the global pharmaceutical market, and the FTA provides opportunities for Indian pharmaceutical companies to access the Japanese market and establish partnerships with Japanese companies. In 2019-20, the pharmaceutical industry in Maharashtra contributed over $15 billion to the state's economy. This can help Indian companies expand their operations and increase their competitiveness in the global market.
In addition to the manufacturing and automotive industries, the services sector in Maharashtra can also benefit from the India-Japan FTA. The services sector is a major contributor to Maharashtra's economy, accounting for over 60% of the state's GDP in 2019-20. The FTA provides opportunities for Indian companies to tap into the Japanese market and provide services to Japanese companies.
Time to startup in Maharashtra
Startups in Maharashtra can potentially benefit from the Japan-India FTA by accessing the Japanese market and exporting their products or services to Japan. The FTA can also make it easier for startups in Maharashtra to import goods and services from Japan, which can help them to grow and expand their businesses.
Startups in Maharashtra may also be able to benefit from Japan's Fund of Funds, which is a government-backed fund that provides financing and support to venture capital firms that invest in startups. This fund can help startups in Maharashtra to secure the funding they need to develop and grow their businesses.
The India-Japan FTA has also facilitated cooperation in other areas, such as technology transfer, skill development, and environmental protection. For example, the Japan International Cooperation Agency (JICA) has been providing technical assistance and training to Indian firms in Maharashtra, helping them to improve their technological capabilities and enhance their competitiveness.
Overall, the India-Japan FTA has brought significant benefits to both countries and has helped to strengthen the economic ties between them. In particular, the state of Maharashtra has been a major beneficiary of this agreement, attracting significant investment from Japanese companies and benefiting from technology transfer and skill development initiatives. It would be interesting to see how industries in Maharashtra tap the opportunity to expand their operations and tap into the Japanese market.
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