Addressing a business luncheon hosted by Nippon Keidanren, Japan’s most influential industry chamber, Singh pointed out that the increase in India’s bilateral trade with China in the past one year alone is more than the whole of India’s total trade with Japan. “Korean products dominate our white goods sector and have high brand recognition in India,” he said.

The total trade between India and China has jumped from just $4.8 billion in 2002-03 to $25 billion in 2006-07. It increased $12.7 billion or more than 50 per cent to touch 37.8 billion in 2007-08. In fact, China has already displaced the US as India’s number one trading partner and the government expects bilateral trade to top $50 billion in the current financial year.

Compare this with India’s trade with Japan that stood at a meager $10 billion in 2006-07. Even by 2010, the two countries hope to just about double the size of bilateral trade to $20 billion. The tepid response by Japanese private sector to investments in and trade with India is attributed to the procedural bottlenecks that plague the domestic business climate.

“...new investors often worry about the difficulties that they may face in a new environment. A vibrant democracy often presents new challenges. I urge you to have faith in our system and our resolve. We are committed to creating a congenial climate for private initiative, risk-taking and enterprise,” Singh said.

Stating that “sky is the limit” for Japanese investments in India, the Prime Minister said India’s infrastructure funding needs are expected at $500 billion over the next five years. “Financing this level of investment presents a special challenge in view of the uncertainties now prevailing in capital markets. We have begun to attract investment from Japan, but it is much less than the full potential,” he said.

Japan Prime Minister Aso Taro, however, said in a media briefing later in the day that over the past five years, Japanese investment in India had increased ten-fold compared with the last 10 years. “We are making progress and the situation is changing really fast,” he said, pointing out that the number of Japanese companies has doubled to over 500 during the period.

Japanese premier Taro Aso, however, said negotiations were still underway and he would refrain from commenting on specific issues. “We will strive for early conclusion of the talks on CEPA,” he said.