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All you wanted to know about Indo-Japan trade

By Abhishek Waghmare
September 15, 2017 16:47 IST
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We take a look at India’s major imports and exports with Japan in recent years.

Visiting for the second time in the National Democratic Alliance (NDA) government tenure, Japanese Prime Minister Shinzo Abe signed 15 agreements with India, panning skill development, science, technology and even sports.

Though the India-Japan joint statement mentioned “enhancing free, fair and open trade”, the industry specific trade developments will take time to fructify.


India’s trade with Japan fell 16 per cent in four years from 2013-14 to 2016-17, mostly on account of falling petroleum demand and prices.

Here, we take a look at India’s major imports and exports with Japan in recent years.

Petroleum products like liquid paraffin, mineral oils and transformer oils form the highest exported component (at the 8-digit HS code level), but their exports to Japan have bottomed over the years, from more than a third of total exports at $2.4 billion to $70 million.

By and large, this can be attributed to fallen oil prices and reduced demand from advanced economies, including Japan.

On the other hand, petrochemical exports - especially those of naphtha and some oils - to Japan have improved, but there is a caveat.

“Naphtha is getting exported without adding value domestically as a raw material,” Mahendra Singh, general secretary of the Chemicals and Petrochemicals Manufacturer’s Association (CPMA) of India told Business Standard.

Exports of soymeal - a processed soyabean product rich in proteins used as animal feed - to Japan greatly reduced in the wake of sustained high price compared to a low international price in 2014-15 and 2015-16.

“India’s soymeal exports went to an abysmally low level in FY15 and FY16, thankfully recovering in 2016-17.

Productivity of soyabean in India is a third of the world average, affecting prices, and eventually exports. Soyabean farmers are affected, too”, D N Pathak, executive director at the Soyabean Processor’s Association of India told Business Standard.

Poor soymeal exports, an indicator from trade data, thus represent the weak links in India’s agriculture.

Bleak situation in soyabean/soymeal has been compensated by improved marine exports.

Shrimps, a staple item in the Japanese diet, topped India’s exports to Japan in 2016-17.

Export of frozen shrimps shot up from $20 million to $284 million in three years.

Short supply from South East Asian countries on account of disease issue, and improved production and quality of the Vannamei variety of Indian shrimp catapulted this spike, an industry expert who did not wish to be named told Business Standard.

Gear boxes formed the biggest imported item from Japan in FY17, valued at $243 million, doubling in three years.

But the imported product that raised eyebrows was polyvinyl chloride, or PVC.

PVC is a well-known common polymer used in variety of applications ranging from pipes, cables, greenhouses, construction activities, etc.

Due to poor capacity addition in terms of domestic production in the last 15 years, India’s reliance on imports has increased, and that on Japanese imports, more so.

“PVC manufacturing is a difficult process with regard to handling raw material. But its consumption across a wide array of industries warrants acceleration in domestic production on urgent basis”, Singh from CPMA added.

Photograph: Amit Dave/Reuters

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Abhishek Waghmare n New Delhi
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