India needs One Nation, One Rules and One Governance model for further growth: Kazuto Suzuki

India has great potential as one of the largest markets in the world. But to realise it, the country needs to invite more foreign companies to set up production sites and connect with the global value chain

India must move towards a unified regulatory, rules and governance structure if it wants to sustain higher growth, Kazuto Suzuki, Director of the Institute of Geoeconomics, Tokyo, told Moneycontrol on the sidelines of the Kautilya Economic Conclave.

“There are differences between the states—different taxations, different rules, different standards. That makes India a less homogeneous market and creates additional barriers for investments. One nation, one set of rules and one governance model can be a nice idea,” Suzuki said. “One of the reasons Japan has grown so fast was because of its homogeneity, which allows a more efficient use of resources.”

Drawing on Japan’s post-war experience, he said industrial policy and state guidance remain essential.

“Market mechanisms alone can sometimes lead to market failure. Proper guidance by the government for the most efficient use of resources is also required,” he noted.

Time for Mega-Deals

On whether India should join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Suzuki said the decision hinges on New Delhi’s willingness to embrace deeper multilateralism.

“Most of India’s FTAs are bilateral because they are easier—you can negotiate and hold back on issues you don’t want to concede. But a collection of bilateral FTAs does not make a mega FTA,” he said.

Joining such blocs, he argued, could open doors for India to integrate into global supply chains and attract investment.

“India has great potential as one of the largest markets in the world. But to realise it, the country needs to invite more foreign companies to set up production sites and connect with the global value chain,” Suzuki said.

Trade Utilisation Needs to Improve

Despite a bilateral FTA signed in 2011, trade between India and Japan has remained modest. Suzuki attributed this to red tape and structural mismatches.

“There are a lot of red tapes—import licences, internal tariffs, non-tariff barriers, and administrative processes. There’s also a mismatch between what Japan exports and what India demands,” he explained.

He added that Japan’s trade model depends on supply-chain integration, which India has yet to adopt.

“Indian industry is not yet focused on integrating into this kind of network,” he said, pointing to quality and logistics bottlenecks. “There is a lack of small and medium-sized industries producing high-quality goods. And even when they exist, transportation from India to Japan is extremely costly due to weak infrastructure.”

Beyond Oil and Geopolitics

Suzuki said recent US-India tensions over Russian oil imports are “less about energy security and more about geopolitics.”

“One of the reasons for the United States imposing an additional tariff up to 50% is primarily Mr Trump’s discontent over India not recognising his claim on his role in the ceasefire between India and Pakistan,” he said. “The rationale of using oil purchases from Russia as an excuse goes beyond the energy issue.”

He called Washington’s stance selective.

“If Mr Trump is serious about stopping Russia’s oil trade, he has to put pressure on China and other major buyers as well. India is significant, but not the only country importing Russian oil,” Suzuki said.

Expanding Strategic Cooperation

On the strategic front, Suzuki said defence and space are emerging frontiers for India-Japan collaboration.

“We are already cooperating in the maritime and space domains. Earlier, our space programmes were largely scientific, but now they are moving towards more practical and security-related applications,” he said.

He credited prime minister Narendra Modi’s leadership for advancing India’s space transition.

“The initial phase of India’s space programme was focused on social development. Now, India has entered the second phase—focused on exploration and security,” Suzuki added.