India, Japan sign currency swap deal worth Rs 80,000cr
TNN | Dec 29, 2011, 02.18AM IST
NEW DELHI: India and Japan on Wednesday signed a revised $15-billion (nearly Rs 80,000-crore) currency swap deal which is expected to help support the rupee.
Officials said that the two Asian giants had a swap deal for $3 billion (around Rs 16,000 crore at current rates) which was signed in 2008, but it expired a few months ago. Talks between the two countries have been on to finalize a revised deal which was signed during Japanese PM Yoshihiko Noda's visit to India.
Japan's foreign reserves hit an all-time high of $1.3 trillion in November, and experts say a swap arrangement may help support the Indian rupee, Asia's worst performing currency this year. On the other hand India's reserves have declined because of the rupee depreciation.
The Japanese government and some of its agencies are funding several infrastructure projects in India, including the Rs 1-lakh-crore Delhi-Mumbai Industrial Corridor and the third phase of Delhi Metro (see box). Traditionally, Japan has helped fund several infrastructure projects in India, while several top Japanese companies are again making renewed efforts to enter the lucrative Indian market.
Experts say the currency swap deal is also a signal that Japan is keen to spread its influence.
Japanese PM Noda urged India and Japan to work towards closer ties between the two nations for better economic, political and regional cooperation. "The driving force behind the development of Japan was the development of the middle class, and I believe that India's middle class will also be the driving force if the manufacturing sector grows. And by the development of the manufacturing sector in India, we can achieve greater trade volumes," Noda told businessmen at a meeting organized by Ficci, CII and Assocham.
Bilateral economic relations between the two countries have been on an upswing. India and Japan signed the Comprehensive Economic Partnership Agreement (CEPA) in February. Commerce, industry and textiles minister Anand Sharma said bilateral trade is likely to increase significantly and hoped that the target of $25 billion (over Rs 1.30 lakh crore at current rates) by 2014 would be achieved. In 2010-11, the level was $13.823 billion (over Rs 73,000 crore).
"The signing of CEPA has begun a whole new chapter in our economic partnership, unlocking the true potential of trade between our two countries. I am hopeful that CEPA will further deepen economic engagement in terms of trade in goods, services, and investment," Sharma said.
"Japan is an invaluable and strategic partner in the process of India's development. India-Japan has to play major role in the globally changing economic landscape," he said.
Bilateral trade between India and Japan during 2009-10 stood at $10.36 billion (nearly Rs 55,000 crore at present rates) and in 2010-11 it reached $13.823 billion (over Rs 73,000 crore), a government statement said.
He, Sharma, urged the Japanese government to invest in the infrastructure sector and called for cooperation in the pharmaceutical sector. "Our pharmaceutical companies can be of immense value in providing affordable healthcare which is much needed in a country of Japan's demographic profile," the minister said.