Lauding the strong bilateral relationship between India and Japan, Prime Minister Manmohan Singh told his Japanese counterpart Shinzo Abe that close economic engagement between the two countries would create an 'arc of advantage and prosperity' throughout Asia.

While addressing a high-powered business delegation, which forms part of Abe's entourage, the prime minister thanked the Japanese entrepreneurs and chief executive officers for their vision of India.

Recalling his visit to Japan in December 2006, Singh reminded Abe that the two nations had at that time pledged to take bilateral ties to the level of a 'global and strategic partnership'.

"In today's changed international system, political, economic and strategic interests of India and Japan have never been so convergent as they are today," Singh said in his speech to the business delegates in New Delhi.

India and Japan have decided to set up Special Economic Partnership Initiative in order to speed up strategic partnership between the two nations. This would focus on key projects in areas ranging from the transport sector to industrial infrastructure to technology and education. He chose to single out Indo-Japanese cooperation in the automobile sector.

"Enormous complementarities and commercial potential exist in a strategic alliance between a technologically advanced and a mature industrial economy like Japan, and a rapidly growing developing country like India.

"The Japanese automobile companies like Toyota, Honda and Suzuki have located part of their global production chains in India.  We need more such models and examples of mutually beneficial collaboration in other sectors," he said.

Pointing out that India's GDP growth rate is touching 9 per cent and that it's foreign exchange reserves are above $200 billion Singh said, "we expect another $30 billion" in 2007-2008.

"Our savings and investment rates are close to 35 per cent of our GDP.  Our foreign trade constitutes 33 per cent (of our GDP), which is a testimony to India's growing integration into the global economy.

"We have a favourable demographic profile and a strong educational system to support rapid industrialisation," Singh added.