Exhorting Japanese investors not to worry about the difficulties thrown up by the international financial crisis, visiting Prime Minister Manmohan Singh Wednesday urged the country's industrialists to have faith in India's financial system.
"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," Manmohan Singh said at a business luncheon by Nippon Keidanren in the Japanese capital.
"I wish to say that new investors often worry about the difficulties that they may face in a new environment. Let me however point 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," he said.
"Korean products dominate our white goods sector and have high brand recognition in India."
Singh acknowledged that India had begun to attract investment from Japan "but it is much less than the full potential."
Bilateral trade has been growing and reached $10 billion for the first time in 2006-07 hoping to achieve a target of $20 billion by 2010.
Singh who kicked off his three-day official visit after a meeting with Emperor Akihito and Empress Michiko detailed the measures taken by his government to ensure adequate liquidity and confidence in the economy.
"The short-term outlook is cloudy but I am confident that the Indian economy has the resilience to sustain its growth momentum in the medium term."
Delving on the economic ties and how it could be further strengthened, Manmohan Singh said both sides could cooperate in the coming period of global slowdown "to devise counter-cyclical strategies to create a new zone of growth in the world."
"The record of our economic and trade interaction in the last few years bodes well for the future. Although the share of India in Japanese foreign direct investment overseas is insignificant, there has been a surge in Japanese investment into India last year. The number of Japanese business establishments now operating in India has increased to over 550."
While quoting Lord John Keynes, a distinguished economist, noted for his work for restoring the economic structure of a world twice shattered by war, Singh said in a "world of uncertainties investment is both an act of faith and also an act of great adventure."
"I urge you to keep faith in India. The India of 2020 or 2040 will be more educated, more skilled and will have far greater purchasing power. It will be the engine of growth for the global economy."
Earlier a 20-member strong Indian business delegation led by chairman and managing director of Reliance industries, Mukesh Ambani, met up with the corporate honchos belonging to the Japan Chamber of Commerce and Industry. He was accompanied by Infosys CEO, Nandan Nilekani and Malvinder Singh of Ranbaxy who earlier this year sold his stakes to Japan's Daiichi Sankyo.
Pointing to the Comprehensive Economic Partnership Agreement, Singh said when finalized it would broaden the trade basket and enhance reciprocal investments.
"It will provide economies of scale and allow India to serve as a global manufacturing hub for Japanese industry. The agreement should promote further export of our goods and services into Japan through the removal of tariff and non-tariff barriers."
This is Singh's third visit to Japan as prime minister following an official visit in Dec 2006 and a July trip to attend the outreach session of the G-8 at Toyako, Hokkaido.
On each visit Prime Minister Singh has met a different prime minister - Shinzo Abe in 2006 and Yasuo Fukuda in July. Now he meets up Taro Aso, who was earlier the foreign minister.