Biz with Japan to be hit; rebuilding to push demand from India

NEW DELHI: Devastation in Japan will hit the Indo-Japanese trade at least in the short-run, even though reconstruction activity in the affected cities may lead to increased demand for Indian steel, experts said.

"In the short-term, delivery of goods in transit will be affected...it would also have impact on exporters' payments," President of the Federation of Indian Export Organisations (FIEO) Ramu S Deora said.

India-Japan bilateral trade stood at over $ 10 billion in 2009-10. India's exports to Japan comprise steel, iron ore, chemicals, while imports include machinery, mechanical parts, auto components and chemicals.

With a desire to give a quantum jump to trade in goods, services and investment, the two countries had last month signed Comprehensive Economic Partnership Agreement (CEPA).

It was expected to boost market access for Indian exporters in pharmaceutical sector, agricultural produce including instant tea, seafood and garments.

"For a couple of weeks, sea cargos would be affected but air cargos will not be really impacted," Justin Paul, formerly Professor with Nagoya University,third largest in Japan,said.

The business transactions would also be impacted as the banking systems were hit due to vast damage to the infrastructure in north east Japanese cities.

According to trade expert Arun Goyal, "A lot of Japanese companies are operating in India. So, there could be a slowdown in investment in the short-run."

Out of $ 126.4 billion FDI into India, Japan contributed $ 5 billion between 2000 to 2010.

However, when the rebuilding of the cities hit by earthquake and Tsunami begin, demand for items like steel is expected to increase.