Japan’s imports to India more than doubled in 12 years to $ 12.8 billion in fiscal 2019 (representative image).
While Japan led the deal, in recent times India has had growing concerns about China’s supply chain dependence combined with the Chinese border turmoil, while Australia is hit hard by Chinese trade restrictions.
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A major move from Japan took place on Tuesday, September 1, which paid off with India and Australia: All three are accelerating supply chain cooperation and have given their bureaucrats just a few months to work out the details.
While Japan led the deal, in recent times India has had growing concerns about China’s supply chain dependence combined with the Chinese border turmoil, while Australia is affected by Chinese trade restrictions. All three countries are highly “dependent on China’s trade.” They also have a direct interest in a stable Indian Ocean and Pacific Ocean.
The Joint Ministerial Conference was held by video and involved Australia’s Minister of Trade, Tourism and Investment, Senator Simon Birmingham, India’s Minister of Trade and Industry Piyush Goyal, and Japan’s Minister of Economy, Trade and Industry , Kajiyama Hiroshi.
What does supply chain resilience mean?
In the context of international trade, supply chain resilience is an approach that helps a country ensure that it has diversified its supply risk across a group of supplier countries rather than relying on one or a few, in this case , depend on China. .
Why is Japan taking the lead?
While Japan exported $ 135 billion worth of goods to China in 2019, it also imported $ 169 billion from the world’s second-largest economy, accounting for 24 percent of its total imports, according to data from tradingeconomics.com . Electrical and electronic equipment, machinery, nuclear reactors and boilers were sectors that registered significant imports in Japan. So if China stops production (as it did during Covid-19), economic activity in Japan will be hit hard.
As part of the country’s economic stimulus package, the Japanese government recently allocated $ 2.2 billion to incentivize its companies to move manufacturing out of China, with much of it likely to return to Japan.
Why did Japan want India there?
Japan is the fourth largest investor in India with cumulative foreign direct investments reaching $ 33.5 billion in the 2000-2020 period, accounting for 7.2 percent of inflows in that period, according to quasi-government agency India Invest.
Japan’s imports to India more than doubled in 12 years to $ 12.8 billion in fiscal 2019. India’s exports to the world’s third-largest economy totaled $ 4.9 billion that year, according to the agency data.
What motivated Australia?
Australia, Japan and India are already part of another informal group: the Quadrilateral Security Dialogue, or Quad, which includes the US China has been Australia’s largest trading partner, accounting for 32.6% of Australia’s exports, with iron ore, coal. and gas dominates the products shipped to the largest economy in Asia. Education is the main part of Australia’s service exports. But relations, including trade ties between the two, have been deteriorating for a while now, a kind of flux from the trade war between the United States and China.
What does India want from her?
While the United States recently became India’s biggest trading partner, China is close behind (the two economies are close), perhaps too close for India’s taste. China’s share of India’s imports in 2018 (considering the top 20 items supplied by China) stood at 14.5%, according to an impact analysis by the Confederation of Indian Industry in February 2020. In areas As Active Pharmaceutical Ingredients for medicines like Paracetamol, India is completely dependent on China. In electronics, China accounts for 45 percent of India’s imports, the analysis showed.
Chinese supplies dominate segments of the Indian economy. The sectors that have been affected by the supply chain problems arising from the pandemic include pharmaceuticals, auto parts, electronics, transportation, chemicals and textiles.
The writer is a published author and blogger at Into India. He has led multiple trade missions to India and is a past president of the Australia India Business Council. The views are personal.
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