A STUDY ON INDIA’S BILATERAL TRADE WITH JAPAN

Abstract

Purpose of the study: India and Japan share strong cultural and economic ties. The economic relationship between the two Asian giants strengthened with the signing of the CECA agreement during the year 2011. The current research would focus on assessing the bilateral trade relations between both the countries and attempts to identify the commodity trade potential to enhance the future trade between them.
 Methodology: The study is based on secondary sources of data collected through the United Nations Conference for Trade and Development, WTO, IMF, RBI, and the Japanese Trade Databases. The annual data for the period 2005 to the year 2016 has been used to analyse the Intensity Indices and the Gravity Coefficient values between India and Japan. Similarly, the annual data from the year 2008 to 2015 is used to calculate the RCA and RID index values and finally, the average RCA and RID (2008-2016) are used for analysis to identify the commodity trade potential between both the countries.
 Main Findings: The study concludes that the trade share of Japan in India’s overall trade has been falling significantly over the years which could be seen through the declining Export Intensity and Import Intensity Indices of India with Japan. However, the overall analysis presents that 28 commodities were feasible for trade between India and Japan from the 56 commodities computed for the study which exhibits a strong potential for enhancing future bilateral trade relations between both the countries.
 Applications of this study: India had made a strategic move with its Look East Policy during the year 1991 to accelerate its trade relations with the East Asian countries and later with its success the same was transformed into Act East Policy during the year 2014. The current study would prove to be useful in shaping the policy changes in this direction.
 Novelty/Originality of this study: The study focuses on the bilateral trade relations between the two important Asian giants, India, and Japan during the post comprehensive economic cooperation agreement between the two. Further, the study identifies the areas of commodity trade potential which paves the direction for new trade between the countries to tap the untapped trade potential.