How Japan and India have become Favoured Markets in APAC Region

India and Japan are the most attractive APAC markets due to their strategic geographical positions, diverse investment opportunities, and growing business ecosystems. India's economic growth is projected to outpace other major Asian economies in 2024, with the International Monetary Fund (IMF) forecasting a 6.3% increase in the country's real GDP this year. Both countries are highly preferred destinations for regional and global market expansion, given their promising economic outlook and potential for growth.

In fiscal 2022-23, the total bilateral trade between Japan and India was valued at USD 21.96 billion. Japan exported goods worth USD 16.49 billion to India, whereas India imported goods worth USD 5.46 billion from Japan. It's worth noting that Japan's exports accounted for 2.31 percent of India's total imports, and India's exports to Japan represented 1.21 percent of India's overall exports.

Innovation and Technology

Both India and Japan have grown as favored markets for innovation and technology. India's tech industry has shown rapid growth, driven by a talented workforce and an emerging startup ecosystem. This has lured potential funding and improved innovative development in domains such as Artificial Intelligence, software, and biotechnology. Japan, on the other hand, has a well-established reputation in technology, and its commitment to research and development makes it a universal leader in areas such as manufacturing, electronics, robotics, and automation. Both India and Japan prioritize innovation, creating a positive environment for advanced technology, and showcasing strong potential for shaping the future of technology.

India has successfully implemented UPI technology, which has had a remarkable impact on promoting digital transactions and providing the large population with seamless access to digital payments. It has also contributed to the country's economic development. Meanwhile, Japan has been a leader in robotics and automation, with prominent firms like Toyota and Honda playing a crucial role in developing advanced robotic technologies for various manufacturing industries.

Strategic Partnerships

With shared geopolitical interests and economic combination, Japan and India have secured their status as a favored strategic partnership. The nations have partnered largely in business, defense, infrastructure, strengthening regional stability, and fostering economic growth. India's advantageous location in South Asia creates a mutually beneficial environment for cooperation with Japan's advanced technology and financial resources. Besides, the combined initiatives, such as the Asia-Africa Growth Corridor and bilateral defense agreements, underline their dedication to bolstering ties. The alliance will improve the nation's global standing and simplify innovation and infrastructure development across different industries.

India's Act East Policy aims to promote cultural understanding and economic cooperation with countries in the Indo-Pacific region through continuous engagement at all levels and improved connectivity. Similarly, Japan's Free and Open Indo-Pacific (FOIP) strategy is designed to foster regional economic growth and involves engaging with nations to promote trade and tackle key challenges.

Masahiro Goto, Professor, Kyushu University said  "After the pandemic, India is being seen as a long-term partner in manufacturing and an appealing investment destination for global corporations.

Infrastructure Development

The robust partnership and shared goals have made India and Japan a favored market in infrastructure development. Japan's infrastructure financing and technology expertise complements India's ambitious development goals. India has taken initiatives like the Delhi-Mumbai Industrial Corridor and the Mumbai-Ahmedabad High-Speed Rail project to showcase its dedication to transformative infrastructure projects. Japan has provided significant funding to several sectors of India, such as energy, urban sectors, and transportation, in line with their needs for modernization and sustainability. With alliances and financial aid, both nations use their capabilities to deal with infrastructure gaps, promote economic growth, and improve connectivity.

India has unveiled its National Infrastructure Pipeline plan, which visualize considerable investments in various industries such as travel, energy, and infrastructure. The plan's objective is to foster economic growth, generate employment opportunities, and enhance the quality of life in the country. Meanwhile, Japan's Bullet Train Project (Shinkansen) has demonstrated its expertise in high-speed rail technology.

Market Reforms

Since 1991, India and Japan have been recognized as important markets for economic growth due to their commitment to economic reform and liberalization. India's economic reforms eliminated protectionist laws, which created a business-friendly environment, attracted foreign investment, and encouraged innovation. Japan, on the other hand, faced economic challenges in the 1990s but implemented structural reforms to promote growth, deregulate industries, and encourage entrepreneurship. Both countries also embraced globalization and increased competition, which led to increased domestic and foreign investment, strong economic expansion, technological innovations, and enhanced trade. Consequently, these market reform strategies positioned India and Japan as leading hubs for economic development in the global landscape.

The Atmanirbhar Bharat Abhiyan was introduced in India due to the economic constraints faced by the pandemic, and it focuses on economic changes to make India more self-sufficient. The plan has measures to improve business, promote the private sector, and lure foreign direct investment. Japan has passed an act called Integrated Resorts (IR) Implementation to open the way for setting up integrated resorts, casinos, and hotels. The initiative is anticipated to secure investment and create new economic opportunities. 

Undoubtedly, both the nations are most favored markets in the Asia-Pacific region because of their robust growth in economy, advancements in technology, alliances and dedication to market reforms and liberalization. As they continue to leverage their unique strengths and navigate the complexities of the global economy, Japan and India are expected to play increasingly important roles in shaping the future of the APAC region and the world. Their rise highlights the immense potential of economic cooperation, innovation, and inclusive growth in driving prosperity and progress in the 21st century.