India and Japan agreed Friday to set up a joint study group to suggest ways to lift bilateral trade beyond the current four billion dollars a year, an official said.
Indian Foreign Ministry spokesman Navtej Sarna said trade featured highly on the agenda of talks Friday between Indian leaders and visiting Japanese Foreign Minister Yoriko Kawaguchi.
China recently replaced Japan as India's top trading partner in the region, with officials saying Chinese Premier Zhu Ronji's visit to New Delhi in 2002 had helped boost Sino-Indian trade to 7.6 billion dollars the following year.
"Both India and Japan want the economic partnership to be on a higher level so that the full potential of our economic relationship can be achieved," Sarna told a media briefing.
"They agreed to set up a joint study group to invigorate the Japan-India economic relationship," he added.
Sarna also said Indian Foreign Minister Natwar Singh and his Japanese counterpart had agreed the two countries would back each other's bids for permanent membership of an enlarged UN Security Council.
"Japan and India are legitimate candidates for the permanent membership of the Security Council and will support each other's candidature," said Sarna.
"They have agreed to hold secretary level talks on the reform of the world body," he added.
Kawaguchi told reporters here that Japan and India were "legitimate" candidates for veto-wielding power on the Security Council - a privilege enjoyed now only by Britain, China, France, Russia and the United States.
Japan, however, has been critical of India's decision in 1998 to declare itself a nuclear power.
Kawaguchi, who arrived in India on Thursday, also held talks Friday with National Security Adviser J.N. Dixit before calling on Prime Minister Manmohan Singh. She is due to return home on Saturday.