Visiting Japanese Prime Minister Junichiro Koizumi stressed in New Delhi on Friday the centrality of economic ties to the growth of Japan-India relations.

"Economic ties are central to strengthening the global partnership established by Japan and India five years ago," the prime minister said while addressing representatives of the Confederation of Indian Industry, Federation of Indian Chamber of Commerce and Industry, and the Associated Chamber of Commerce and Industry in New Delhi.

Koizumi noted he and Prime Minister Manmohan Singh had agreed to set up a joint study group to strengthen trade ties.

"Our economic relations are blessed with a huge potential, but perhaps the business communities of the two countries have not woken up to the possibilities," Koizumi said, urging the industry to look at trade opportunities in each other's country.

"Japanese investments in India too have increased," Koizumi said, noting that compared to 220 Japanese companies, which had operations in India in 2001, there were over 300 in 2004.

Quoting a survey, which ranked India as the third most favored investment destination for Japanese companies after Chinese mainland and Taiwan, he said it was important that Tokyo and New Delhi work towards "expanding this trend."

"It augurs well for Japan and India to further develop relations at all three levels - bilateral, regional and global," Koizumi said.

Japan is the fourth biggest investor in India after the United States, Mauritius and Britain. It invested nearly 3 billion US dollars between 1991 and 2004.

Koizumi arrived here Thursday night on a three-day visit to India. He will also travel to Pakistan and Europe.