Mumbai: India and Japan have signed an agreement to cooperate in energy conservation at the second round of an energy dialogue between the two countries in New Delhi.

The Energy and Resources Institute (TERI) of India and the Institute of Energy Economics of Japan (IEEJ) signed the memorandum of understanding (MoU) in the presence of Japanese economy, trade and industry minister Akira Amari and Montek Singh Ahluwalia, deputy chairman of the planning commission.

The agreement provides for Japanese industrial aid to India in return for the latter implementing energy conservation policies in fifteen identified sectors, the two sides said in a joint statement.

"We have agreed that on one hand, India will make an effort to increase efficiency in energy intensive industries and Japan will provide support in various ways, including human resources development," Amari said after signing the pact.

Amari said the long-term vision of Japan''s efforts were to arrive at a system wherein energy cooperation could spur economic development.

"Countries that make efforts to address the global environmental issue should not have to do that at the cost of economic development. It is important for us to create a scheme in which a flexible approach can be taken that will reflect the circumstances in each country and that will enable further economic growth in addition to improving the environment. I believe we have been able to take the first step in that direction," he said.

The Indo-Japan energy dialogue was initiated during prime minister Manmohan Singh''s visit to Tokyo in December 2006. The first Indo-Japan energy talks were held in April. The second round of energy talks comes ahead of the India visit of Japanese prime minister Shinzo Abe, planned in August.

In fact, Japan is seeking a wider energy dialogue involving Asia''s major economies, India, China. Japan has initiated energy cooperation with Beijing earlier this year, amid growing concerns over global warming. But is yet to get China and India to commit to cut greenhouse gases after 2012, when the current UN-led Kyoto protocol expires.

According to India ''s planning officials, the country''s primary energy demand would increase by six per cent a year.

India ''s oil demand in 2007 is expected to rise by 3.4 per cent from last year to about 2.7 million barrels per day (bpd), according to the International Energy Agency (IEA).

Japan will invest $10 billion in next five years in the Delhi - Mumbai Industrial Corridor (DMIC), commerce and industry minister Kamal Nath said at a meeting organised by the Confederation of Indian Industry (CII). He said that DMIC project, with an estimated investment of $90 billion is at an advanced stage of finalisation.

"The route of DMIC should include Madhya Pradesh majorly in the route along with the existing six states", said Nath. DMIC also covers Delhi, Haryana, Rajasthan, Gujarat and Maharashtra.