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Drawing comparisons between 'Modinomics and Abenomics', Japanese financial major Nomura has said that Japan can play an important role in developing India's infrastructure and manufacturing sectors.
'Abenomics' is widely used for economic policies and reform measures initiated by Japanese Prime Minister Shinzo Abe, while 'Modinomics' refers to that of Indian Prime Minister Narendra Modi, who had recently said that partnership with Japan was of high priority for his government.
Narendra Modi was expected to visit Japan earlier this month, but the trip got postponed and may now take place later this year.
"We see a growing symbiotic relationship between India and Japan as both countries share large comparative advantages and are embarking upon significant market-opening reforms under Abenomics and Modinomics," Nomura said in a research note today.
According to the Japanese brokerage firm, India is at an inflection point. Under Modi's new reform-minded government, the medium-term outlook looks much improved.
"A renewed sense of optimism abounds and the opportunities India presents to foreign investors Ц and Japanese investors in particular Ц seem more attainable than ever," Nomura said.
The landslide May election victory for Modi, combined with Governor Raghuram Rajan at the helm of the Reserve Bank of India (RBI), is a potential game changer for India, it added.
Both countries offer each other large comparative advantages. While, Japan can play an important role in developing India's infrastructure, India offers low costs, burgeoning markets and soon, the world's largest population, the report said.
The Nomura report said under the Modi Administration, the issues like infrastructure constraints, uncertainty of laws, archaic labour laws, myriad and complex legal procedures that are faced by Japanese investors would gradually be addressed.
About 1,000 Japanese firms operate in India including brands like Honda and Suzuki in automobiles; Sony and Panasonic in electronic goods; Cannon, Ricoh and Nikon in optical instruments and Hitachi and Mitsubishi in capital goods.
India-Japan bilateral trade has increased steadily over the last decade, at a compound annual growth rate of around 15 per cent during the period 2004-2014.
However, despite this rise, the scope for greater bilateral ties remains immense as India-Japan trade accounts for a minuscule 2 per cent of India's total trade and around 1 per cent of Japan's total trade, Nomura added.