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In
quest of strategic global partnership
A
ROCK solid relationship structured over half-a-century forms
the foundation of Indo-Japanese cooperation today. The relationship
has been further cemented with the pledge of the Prime Ministers
of both the countries-- Manmohan Singh of India and Shinzo Abe
of Japan-- to form Strategic
and Global Partnership between the two countries.
The major planks of the aspired partnerships reflected in the
Joint Statement issued by the two leaders during the Indian
Prime Minister's visit to Japan in December , 2006 are: Holding
annual Summit-level meetings in respective capitals; Institutionalization
of Strategic Dialogue at the Foreign Ministers level; Launching
negotiations for the conclusion of a bilateral EPA/CEPA; Setting
up of a Business Leaders' Forum; Cooperation in the field of
Science and Technology; Expansion of youth exchange, promoting
Japanese language education in India, etc.; Cooperation in multilateral
framework such as EAS, UN, SAARC, etc.; and Cooperation in the
field of energy, environment, anti-piracy, non-proliferation,
etc.
"I
am convinced that the 21st Century will be the
Century of Asia. But to ensure this and to translate
this into global prosperity and peace for all, Japan and India
must work together", asserted the Indian PM while interacting
with the business community during his visit to Japan.
Joint
Study Group (JSG), composed of government officials and representatives
of business and academia from the two countries, held four meetings
after July, 2005. JSG submitted its report to both Prime Ministers
when they met in July, 2006, which includes a recommendation
for launching EPA negotiations. In December, 2006, the Prime
Ministers of the two countries decided to launch immediate negotiations
for the conclusion of a bilateral Economic Partnership Agreement/Comprehensive
Economic Partnership Agreement aiming to complete in substance
as soon as possible in approximately two years.
Japan
's FDI to India will amount to more than $1.8 billion over 3
years. This is reflected in a document of the Japanese Embassy
in India. Only by totaling 22 FDI projects reported in Japanese
media, Japan's FDI to India will amount to more than $1.8 billion
over 3 years from 2005 to 2007, or $600 million per annum. Adding
other pipeline projects, including 7 projects reported without
specific investment amount, the total amount will very easily
exceed $2 billion over 3 years. An annual average of $600 million
will far exceed the past peak of $514 million in 1997.
Some representative projects of the total number of Jap
projects in India include: Maruti-Suzuki $700 million); Mitsubishi
Chemical's MCC PTA ($370
million); HONDA Group ($250
million); TOYOTA ($130 million); ASAHI India Glass ($130
million).
Japan's
FDI concentrated largely in two major sectors: automotive industry
(60% of the total) and petrochemicals (20%).
New
diversified areas of investment are, however, emerging such
as other manufacturing industries, pharmaceuticals, food processing,
IT soft-wear, textile among many others.It is also noteworthy
that many SMEs (small and medium scaled enterprises) are demonstrating
their keen interests in the Indian market along with conventional
big enterprises.
21ST
CENTURY
Century of Asia: Indian
PM
“I
have
many cherished memories from my long association with
Japan, not least the helping hand extended by Japan to
India during our very severe balance of payments crisis
of 1991. Japan was truly a friend in deed, to an India
sorely in need. Those early days of India’s economic reforms
process now appear distant. It is important to remember
that despite several changes of government in these past
15 years, India has remained on the path of economic reforms
and liberalization we started in 1991.
The
Indian economy is now on a new path of accelerated growth.
For two decades our economy grew at around 6.0 per cent
per annum. But in the past four years we have recorded
8.0 per cent annual growth. In the first half of the current
fiscal year the growth rate recorded a new high of 9.1%.
The manufacturing sector is fast catching up with the
services sector. These two sectors account for almost
80 per cent of our national income.
“This
remarkable growth is being led by an investment rate of
31 per cent of GDP, financed almost entirely by a matching
savings rate of over 29 per cent. India’s stable macro
– economic indicators lead me to believe that we have
the potential to achieve double digit growth in the coming
years.
“Our
challenge, however, is not only to sustain high growth
rates, but to make this process inclusive of the demands
of equity and environmental sustainability. Growth has
already helped millions of our citizens to emerge from
abject poverty, which is reflected in the decline of the
poverty ratio from above 50% in the seventies to below
20% today. This has added large numbers to our booming
consumer markets.
In
this journey of unleashing the creativity and enterprise
of the Indian people, and seeking growth with equity,
we want Japan to be our active partner.
“We
are deeply appreciative of the assistance Japan has made
available over the years, through its official development
assistance programme. Delhi Metro is already a visible
symbol of India-Japan collaboration and we look forward
to more such projects that can make a tangible difference
to the daily lives of our citizens.
In
the years ahead we wish to focus on building a much deeper
and wider relationship with Japan’s business and industry.
Our economic relations presently fall far short of the
potential. I have been surprised to see Japan lose ground
in India during the 1990s to other East Asian and South-east
Asian economies, both in terms of foreign investment flows
and trade flows.
“It
is a fact that South Korean consumer brands have moved
aggressively into India and their brands have very high
recognition value among our consumers. On the trade front,
India’s trade with both China and South Korea is booming
and grew last year at around 40% with both countries.
China’s trade with India is nearly three times India’s
trade with Japan and Korea’s trade with India is almost
equal to Japan’s trade with India.
“The
time has come for Japanese companies to reverse this situation.
Japan must regain its historic status as our most important
business partner in Asia. We cannot forget the critical
role Japanese companies have played in the development
of India’s automobile and other industries in India. The
challenge is before all of us is obvious. I invite Japanese
Business Community to take full advantage of opportunities
that present themselves in my country.
“I
am happy that there are indications that the trend is
already beginning to change. Since the end of 2004, over
$ 5 billion have been invested from Japan in India’s capital
markets. This is a ringing endorsement of the potential
and profitability of investing in India and will, I hope,
set the tone for greater direct investment as well. I
am also told that the number of Japanese companies in
India have grown by 50% in the last three years.
“I
do hope that you have noted the results of a JETRO survey
conducted in 2005, which concluded that the profit prospects
of Japanese manufacturing companies was the best in India
as compared to all ASEAN countries. As a consequence,
more than 90% of such companies in India were planning
to expand their operations in the next couple of years.
I urge you to weigh the initial problems of entry against
the long-term profitability and stability of doing business
in India.
An
economically resurgent India today offers a variety of
investment opportunities, both in traditional and new
sectors, in labour-intensive and knowledge-based industries.
In bio-technology, nano-technology, information technology,
automobiles and aerospace, textiles and leather, marine
products and in many other areas Japan and India can come
together.
I
am of course aware of the concerns Japanese investors
have about doing business in India. Our government will
address all legitimate concerns of investors. We are committed
to improving our infrastructure, simplifying our taxation
regime, reducing further our tariffs and eliminating bureaucratic
delays. We have made substantial progress in each of these
areas, but I am aware that there is more to be done. We
will do our very best.
The
focus of our government has been to create world class
infrastructure in India. I am personally monitoring all
the major infrastructure projects every quarter as head
of the Committee on Infrastructure. We have estimated
that India’s investment needs in area of infrastructure
will be at least $320 billion in the next five years in
infrastructure alone. We have estimated that our total
investment requirement would be closer to US$ 500 billion.
This requires public and private, domestic and foreign
participation in our economy . We happily welcome foreign
investment and seek to promote public-private partnership
on a large scale.
As
part of such innovative public–private partnerships, we
have made provisions for grant assistance through a specially
created “viability gap funding” mechanism, and for access
to long-term funds through a special purpose vehicle,
the Infrastructure Development Finance Company. The qualitative
and quantitative expansion of education in India will
enable us to sustain a highly productive work force with
a wide range of skills.
There
are already more than 70 Indian software companies and
5,000 Indian engineers operating in Japan and Indian companies
are making significant efforts to train software professionals
for the Japanese market. Japanese has already been introduced
as an optional foreign language in our secondary schools
and the government is committed to increasing Japanese
language learning opportunities in India. We would urge
the Japanese industry to exploit India’s IT advantage
the way the US and Europe have done and are doing.
India’s
fast expanding economy will create a large demand for
energy. There are many opportunities for collaboration
between Indian and Japanese companies in the area of energy
efficient and environmentally friendly technologies. We
must exploit this vast latent potential.
Prime
Minister Abe and I are sincerely and deeply committed
to breathing new life into our traditional friendship.
We propose to launch negotiations on a Comprehensive Economic
Partnership Agreement between India and Japan.
I
invite all of you to a youthful, dynamic and self confident
India, where more than a billion people are seeking socio-economic
progress in the framework of a functioning democracy,
an open society and an open economy deeply committed to
fundamental human rights and respect for rule of law.
I invite you to join us in this historic journey of creativity
and enterprise.
I
am convinced that the 21st Century will be the Century
of Asia. But to ensure this and to translate this into
global prosperity and peace for all, Japan and India must
work together. I invite you to join us to build a new
India, a new Asia and a new world.”
Indian
PM’s speech at the Indo- Japan Business Luncheon Meeting
Tokyo, December 15, 2006
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Against
this backdrop, one finds Indo-Japanese trade relations and economic
cooperation going stronger by the years. During the former Indian
Prime Minister A B Vajpayee's Japan visit in December 2001 on
the eve of completion of 50 years of India-Japan diplomatic
relations, then Japanese Prime Minister Zunichiro Koizumi had
observed "Japan and India have never been at war and have
consistently maintained friendly relations" and hoped to
strengthen friendship between the countries through economic
cooperation, security and other areas of cooperation as future
global partners. The Indian Prime Minister in return echoed
Koizumi's voice. Their commitment reflected in higher bilateral
trade though, if compared with neighbouring China's trade with
Japan, India's share in Japan's total trade does not give any
impressive look. So also in the field of foreign direct investment.
Japan which is the fourth largest investor in India itself
is not happy with this rate. India has to do a lot to create
an investor-friendly environment through speedier economic reforms
and freeing the country from clutches of deregulation at the
earliest. What India should do to promote more FDI?: the question
was raised by none else than the Japanese Ambassador to India,
Mr. Akira Hayashi during the Joint Meeting of the India-Japan
Business Cooperation Committees (IJBCC) in Bangalore on December
19, 2002. "I think a very comprehensive and convincing
answer was given by the Report of the Steering Group on Foreign
Direct Investment chaired by Mr. N. K. Singh of Planning Commission.....the
answer to the question seems to me the implementation of prescriptions
for which a broad-based consensus does exist". Commenting
on the country's economic reforms process, the Indian Prime
Minister told the Association of South East Asian Nations (ASEAN)
summit in October, 2002:"It is in current fashion to compare
economies to creatures like dragons, tigers and elephants. Like
an elephant, the Indian economy may be somewhat slow to gather
momentum but when it does so, it is unstoppable, irreversible".
After about two months in December, 2002, at IJBCC meeting The
Japanese Ambassador observed: "Indeed this Indian "Elephant"
is fast catching with East Asian "Dragons" and "Tigers".
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Increasing
salience of the Indo-Japan
Global Partnership
"The
two leaders affirm that Japan and India are natural partners
as the largest and most developed democracies of Asia,
with a mutual stake in each other's progress and prosperity.
Indeed, a strong, prosperous and dynamic India is in the
interest of Japan, and likewise, a strong, prosperous
and dynamic Japan is in the interest of India. They have
responsibility for, and are capable of, responding to
global and regional challenges, and they must play an
active role in the promotion of peace and stability in
Asia and world at large. Recognising that Asia is emerging
as the leading growth center of an increasingly interdependent
global economy, the two countries are also keen to pursue
a comprehensive economic partnership in the region and
nurture sustainable economic growth, social peace and
political tolerance in open and cooperative regional frameworks.
“The
two leaders welcome the Joint Statement issued following
talks between the Minister of State for Defense of Japan
and the Defence Minister of India in May, 2006 and reiterate
their commitment to enhance defence cooperation to achieve
the common goal of promoting the security, stability and
prosperity in Asia and in the world at large as well as
in tackling regional and global security challenges. They
urge their concerned agencies to develop an annual calendar
of cooperation and exchanges relating to defence and security
and to progressively enhance cooperative activities, including
highlevel exchanges and consultation between services.
The two leaders appreciate the recent developments in
service-to-service cooperation, including cooperation
in UNDOF.
“Recognising
that Japan and India have large Exclusive Economic Zones
and maritime interests, the two leaders confirm their
intention to work closely to enhance cooperation in capacity
building, technical assistance and information sharing
between their respective agencies and undertake anti-piracy
measures. They share the view that Japan and India must
cooperate closely to ensure the safety and security of
international maritime traffic that are vital for their
economic well-being as well as that of the region.
“Convinced
that comprehensive economic engagement between the two
countries must be a core element of their strategic partnership
and also recognising that closer economic integration
between Japan and India will contribute to further growth
and stability in the broader Asian region, the two Prime
Ministers have decided to launch immediate negotiations
for the conclusion of a bilateral Economic Partnership
Agreement/ Comprehensive Economic Partnership Agreement
(EPA/CEPA), on the basis of the recommendations submitted
by the Joint Study Group.
“The
two leaders confirm that Japan’s ODA will continue to
support India’s efforts at accelerated economic and social
development as well as to further strengthen Japan-India
partnership. They direct their concerned agencies to intensify
cooperation under the ODA, particularly in priority sectors
such as infrastructure, environment, social development
and human resource development.
“In
order to widen and deepen economic engagement even as
an EPA/ CEPA is negotiated, the two leaders announce an
“Japan-India Special Economic Partnership Initiative”
(SEPI). This initiative will promote enhancement of investment
from Japan to India and help develop India’s infrastructure
and manufacturing capacity, taking full advantage of the
ample availability of skill and human resources and the
public-private partnership policy initiative of the Government
of India.
“Emphasizing
the major role of the private sector in strengthening
economic engagement, the two leaders announce the setting
up of a Business Leaders’ Forum, comprising ten business
leaders from each country. This Forum will have the mandate
to develop a roadmap for enhanced partnership and cooperation
between the two countries at the business level and generate
ideas for furthering the goals of the SEPI and taking
forward the negotiations on the EPA/CEPA.
“The
Japanese side welcomes Indian investments in Japan. The
two sides will coordinate to facilitate their location
and activities in the country. Recognising the competitive
advantage of India in software development and IT-enabled
services, the two sides will also work together to facilitate
the functioning of Indian companies in this field in Japan.
“The
two leaders welcome the outcomes of meetings of Working
Groups set up under the Japan-India Information and Communication
Technology Forum, which include field trials in India
for introduction of Japanese wide-band wireless technology
i- Burst for field trials in India, joint research on
Natural Language Processing by National Institute of Information
and Communications Technology (NICT) of Japan and Centre
for Development of Advanced Computing (CDAC) of India,
and exchange of researchers.
"Software
experts and other technical personnel. The two leaders
urge their Ministries concerned to pursue actively the
identified areas of cooperation. The Japanese side will
give consideration to the request for assistance in setting
up a National Gigabit Backbone Network in India.
“The
two leaders believe that cooperation in science and technology,
including in frontier areas of research and development,
constitutes a key element of the strategic partnership
between the two countries. The two leaders welcome the
holding of the 7th
Joint
Committee on Science and Technology in November 2005 as
well as the Japan- India Science and Technology Initiative
Meeting in October 2006.
“The
two leaders believe that in order to substantiate the
Japan-India strategic partnership there must be a quantum
increase in cultural, academic and people-topeople exchanges.
Such contacts will also build upon the goodwill that exists
in the two countries in respect of each other and help
raise the profile of India in Japan and of Japan in India.
With this larger policy objective in mind, the two leaders
endorse a number of initiatives to qualitatively upgrade
such contacts.
“The
two leaders designate the Year 2007 as the “Japan-India
Tourism Exchange Year” and direct the Ministries concerned
to carry out various activities to promote tourism exchanges.
They welcome a Joint Document on expansion of tourism
exchanges between the two countries.
“Noting
that civil aviation links between the two countries are
a key element for fostering closer economic and people-to-people
contacts, the two leaders welcome the positive outcome
of bilateral civil aviation talks and direct their respective
authorities to expeditiously implement the agreed measures
to expand air links commensurate with the requirements
of growing economic relations and enhanced tourist flows.
The Indian side invites Japanese participation in the
development of airports in India through public private
partnership and also under the ODA. The Japanese side
will give serious consideration to the idea.
“The
two leaders share the view on the usefulness of having
dialogue among Jaan, India and other like-minded countries
in the Asia-Pacific region on themes of mutual interest.
The two governments will consult on the modalities.
“The
two sides reiterate their commitment to disarmament and
non-proliferation objectives, and their determination
to work as partners against proliferation.
“The
two leaders express serious concern regarding the threat
of proliferation of weapons of mass destruction and their
delivery systems, which confront the region and the wider
world. They reaffirm that Japan and India need to work
in a concerted manner to effectively counter these dangers,
which imperil their peaceful societies.
The
two leaders reaffirm their shared recognition of the importance
of strengthening the multilateral trading system. The
two countries will make their utmost efforts towards the
early conclusion of the WTO Doha Round negotiations as
responsible members of the G-6.”
*
From Text of Joint
Statement of Prime Minister Shinzo Abe and Indian Prime
Minister Manmohan Singh on Japanese Towards Japan-India
Strategic and Global Partnership issued in Tokyo on
December 15, 2006
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Japan's
trade in goods with India in calendar 2006
stood at $ 8.51 billion, according to provisional estimate against
$ 6.75 bn in 2005. While exports to India in 2006 stood at $
4.45 bn against $ 3.53 bn, imports stood at $ 4.05 bn compared
with $ 3.21 bn in 2005 leaving a surplus trade balance of $
399 mn in 2006 with India. According to a provisional estimate
of the Indian federal ministry of Commerce, the Indo-Japanese
bilateral trade in fiscal 2005-06 stood at $ 6.54 bn
signifying around 22 percent growth over 2004-05. So
far as foreign direct investment (FDI) is concerned, Japan has
now emerged as the third-largest FDI contributor to India. Japan's
cumulative FDI inflow in to India between 1991 and July 2006
stood at $ 2.15 bn accounting for approximately 6 percent of
the total FDI inflows in to India during this period. The Jap
foreign direct investment in last two financial years aggregated
at $ 1.8 bn. the Jap equity investments in India now stands
at around $ 5 bn.
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Japanese
investments into India
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Suzuki
plans additional US$ 1.7 billion investments in India
in a phased manner up to 2010for its second four-wheeler
plant and increase production capacity of car engines.
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Toyota
Motor Corporation plans an assembly plant for low-priced
compact cars in southern India by 2010.
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Zentek
Technology, a digital consumer electronics software
maker, will set up development facility in Gurgaon.
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Mitsubishi
UFJ Securities company has opened its representative
office in Mumbai.
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Kyushu
Electric Power Co. has signed an MOU with NTPC Ltd.
to promote technological and environmental expertise
exchanges.
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Nissan
would
create production facility of four-wheelers in India
jointly with its French partner Renault and Mahindra
& Mahindra. The new plant, located at Chennai,
is expected to entail an investment of $ 85.7 million.
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Closely
linked to the prospect of FDI is the improvement of India's
economic infrastructure. In this respect too Japan has been
helping India since 1958 through its Official Development Assistance
(ODA) programme. However, In 1999-2000 India did not get anything
due to sanctions imposed by the Japan government for the Nuclear
Test carried by India.Over the years, our soft loan assistance to India has
expanded to cover a wide range of areas, from economic infrastructure
to afforestation and preservation of cultural heritage.
The Government of Japan is extending a massive package of Official Development
Assistance to India, in the form of soft loans totaling ¥184,893 million (approximately
Rs.6916 crore) for fiscal 2007-08. FY 2002-2003 was a landmark year for the Japan-India
development partnership, as India became the largest recipient of
yen loan assistance from Japan that year. Since then, for the last
four consecutive years, India has been the top recipient of Japanese
soft loan assistance. With
the yen loan commitment to India going up this year by 18.9 percent
over the previous year’s commitment, the Japanese assistance has
attained new peak again.
While the total amount of Japanese soft loan to developing countries is
decreasing, that of Japanese soft loan to India, by contrast,
is increasing substantially for these years. This reflects how
deeply the Japan-India development partnership grows, and how
far Japan attaches the importance to India.The 2007-08 loan package covers 11* large-scale projects in
the areas of power distribution, transportation, irrigation,
water supply, drainage and environment. These concessional loans will
be made available through the Japan Bank for International Corporation
(JBIC).
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ODA
package (2007-08)
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Delhi
Mass Rapid Transport System Project (Phase 2)
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Bangalore
Power Distribution Project
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Visakhapatnam
Port Expansion Project
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Transmission
System Modernization and Strengthening Project in
Hyderabad Metropolitan Area
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Andhra
Pradesh Irrigation and Livelihood Improvement Project
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Tripura
Forest Environmental Improvement and Poverty Alleviation
Project
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Gujarat
Forestry Development Project (Phase 2)
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Kerala
Water Supply Project (II)
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Agra
Water Supply Project
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Amritsar
Sewerage Project
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Orissa
Integrated Sanitation Improvement Project
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A
survey of Japanese investors' opinion about Investment Environment
in India by the Federation of Indian Chambers of Commerce and
Industry (FICCI) survey reveals an encouraging trend that majority
of the Japanese companies surveyed said that they are making
profits and are "positively considering further expansion
of their operations". However, to many of them, the inhibiting
factors are differences in business practices, environment and
culture etc but at the same time they aware of India's huge
market potential, especially in IT and IT-related. On the contrary,
FICCI survey points out that numbers of American and European
Fortune 500 companies find it comfortable to operate in India
in the post-Reform era. The majority of Japanese investors surveyed
maintains that availability of skilled manpower is a major advantage
enjoyed by India in attracting foreign investment into India
but at the same time a healthy market growth is also equally
important. there has to be clarity in the policy guidelines..
Most of Japanese investors feel that ground level hassles like
labour laws, taxes, legal and regulatory framework are high
in India. They consider procedural delays a major discouraging
factor for potential investors. The infrastructure forms the
backbone of development of any country. According to the majority
of the Japanese investors, overall infrastructure facilities
are lacking in India. To attract investment, transport infrastructure
needs improvement; power facilities are below average. The telecommunication
facilities are however rated as "average". The FICCI
survey report only corroborates what the Japanese Ambassador
stated in the IJBCC meeting. Referring to the Japanese investors
he said: "They are here and prepared to increase their
investment provided their existing operational environment improves".
The Jap companies who have been surveyed have emphasized mainly
on environmental improvement. However, in METI surveys of the
Japanese manufacturing companies India emerged as a potential
future market the major reason being a promising country for
investment in long term perspective.
In
an interview with indiaonestop.com
the Chairman of the Japan External Trade Organization (JETRO),
Mr. Osamu Watanabe said that " Japanese investment in India
is driven by Indian domestic demand, and that for reasons such
as geographical factors, high tariffs and other regulations,
it would be difficult to expect the same level of growth as
in Sino-Japanese trade." The sectors that attract Japanese
investment include transportation (28 percent); telecommunications
(18%), fuel (13.5%), chemicals (12.17 percent) and trading (6
percent). Greatly appreciating the consistency of India's economic
reforms, the JETRO Chairman said that although investments in
IT and automobile industries are increasing, thanks to deregulation,
further economic reforms and deregulation are required to attract
foreign investment into India. "Specifically, the retail
and real estate industries are still closed to foreign investors,
and respective deregulation measures are urgently needed. While
there have been governmental efforts to reform inflexible labour
laws, implementation is still to be seen." The Indian sectors
that attracted major Japanese investments include automotive,
chemical, electronic and electric goods.
It
is relevant to quote Mitsui & Co.'s Sinichi Kimura's observation
about India made in his speech at the Standing Committee Meeting
of Japan-India Business Cooperation Committee (JIBCC): "It
is absolutely necessary for India to take steps to strengthen
the competitiveness of Indian products and to improve the comprehensive
productivity through revision of the Labour Act, improvement
of infrastructure and individual private companies, of self-help
improvement.
So far investments
in Japan by Indian companies are concerned. JETRO is playing
the role of a nodal agency. JETRO
has two offices in India-in Mumbai and New Delhi- and an investment
advisor in Bangalore, which provide information on direct two-way
investment. JETRO has opened its "new" Invest Japan
Business Support Center (IBSC) in Tokyo on May 26, 2003 which
is a one-stop centre providing investment-related information
and services. IBSC is assisted by advisors on IT, biotechnology,
industries etc. and offers free of charge office spaces. IBSC
provides support to those Businesspeople and non-profit
government organizations involved in trade and investment who
wish to export to Japan or make investments with Japanese companies.
The IBSC services are available in central business districts
of major Japanese cities-- Tokyo, Osaka, Yokohoma, Nagoya, Kobe
and Fukuoka. Yet another effort to help foreign investors identify
potential investment areas, potential joint venture partners
is the Trade Tie-up Promotion Program (TTPP), an on-line tool.
Apart from gauging business trends in each country, TTPP help
find technology partners and a powerful marketing communication
tool.
Why
invest in Japan? Japan, the business hub of Asia's growing economies,
is rated as world's second largest market with the prospect
of a high level of personal consumption growth. JETRO claims
that with high income levels and with large citites spreading
across the country, Japan boasts several major economic regions
that exceed in scale the entire national economies of China
and other nations. Apart from highly skilled human resources,
the country offers innovative technologies. So far as infrastructure
back-up is concerned, the transportation network is rated as
one world's bests. Other advantages to work with Japan include
world class information and communication technology ICT) facility,
a highly reliable logistic infrastructure and other investor-friendly
facilities. Responding to economic globalization, commercial
laws and major elements of country's economic legal framework
have been reformed by the Japanese government. It is significant
to note that many a foreign companies doing businesses in Japan
have posted higher profit even than Japanese companies themselves.
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INDO-JAP GLOBAL
PARTNERSHIP: Eight-fold
Initiatives
Enhanced dialogue and exchanges
The
two leaders recognize the importance of regular dialogue
and exchanges in increasing mutual understanding. They
note with satisfaction in this context that their meeting
was the third one between them in a period of one year.
They decided to hold annual Prime Minister level meetings,
alternately in the two capitals or elsewhere, taking advantage
of opportunities at regional and multilateral meetings.
They also confirm their intention to promote regular ministerial
level exchanges, including those between their Foreign,
Defence, Trade, Finance and ICT Ministers. A High Level
Strategic Dialogue will also be launched between the two
countries. The two sides will fully utilise their existing
dialogue mechanisms, and launch an oil and natural gas
cooperation dialogue between the Ministry of Petroleum
and Natural Gas of India and the Ministry of Economy,
Trade and Industry (METI) of Japan.
Comprehensive
economic engagement
The
two sides will take several measures for broadening and
deepening economic and trade cooperation between India
and Japan based on the complementarities of the two economies,
and decided to work towards quantum increase of the trade
volume as well as for diversifying trade.
The
two leaders directed the India-Japan Joint Study Group
(JSG), which is to be launched by June 2005, to submit
its report within a year, focusing on measures required
for a comprehensive expansion of trade in goods, trade
in services, investment flows and other areas of economic
relations between the two countries. The JSG will also
consider the feasibility of the two countries moving towards
a liberalized and upgraded framework for economic engagement,
including an India-Japan economic partnership agreement.
The Policy Dialogue, which was recently launched between
the Ministry of Commerce and Industry of India and METI,
will be utilised to identify and implement on a priority
basis measures required to remove impediments and facilitate
closer economic relations. The JSG comprising of government
ministries, business leaders and academics, may take into
account inputs provided by this Policy Dialogue.
The
Governments of India and Japan will make a special effort,
in collaboration with the private sector, to encourage
higher levels of investment by Japanese companies in India.
They will strengthen technical cooperation to improve
the competitiveness of Indian manufacturing industries.
The Government of Japan is also prepared to provide every
possible support to International Engineering & Technology
Fair organized by Confederation of Indian Industry in
2007, exploring the possibility to be a partner country.
The Joint Task Force on ICT and the ICT Forum will be
utilized to develop a roadmap for increased ICT cooperation,
taking into consideration the potential for synergising
the advantages of both countries in this field, including
the idea of an IT databank.
5.
The Government of India highly appreciates the fact that
India is the largest recipient of the Japanese Official
Development Assistance. The Government of India also notes
with appreciation that the Japanese side has committed
yen loans of JY 134.5 billion for eight projects in FY
2004, including North Karanpura Super Thermal Power, Delhi
Metro and Ganga Action Plan for water purification(Varanasi).
It is confirmed that the ODA will continue to be utilised
to support India’s efforts at accelerated economic development,
particularly in priority sectors like infrastructure,
including transportation and power, and environment. The
Governments of India and Japan agree in principle to resume
the Japan Overseas Cooperation Volunteers (JOCVs) scheme
in India.
Keeping in view the renewed focus of the global partnership
and the goal of bringing about a quantum increase in the
level of economic engagement, the two sides shared the
view that Japan’s Special Terms for Economic Partnership
(STEP) Scheme could be one of the effective means for
carrying out large-scale priority projects in infrastructure
sector in India. The two sides confirmed their intention
to examine the feasibility of proposals for dedicated
multimodal high-axle load freight corridors with computerized
train control system on Mumbai-Delhi and Delhi-Howrah
routes utilising the STEP Scheme and with the inputs of
Japanese technology and expertise.
The
two Governments will work for improved connectivity between
the two countries, including through civil aviation links
and shipping links. Negotiations to revise the existing
tax treaty will be concluded at the earliest possible
date.
Enhanced
security dialogue and cooperation
The
two leaders recognize the important roles India and Japan
play in tackling regional as well as global security challenges.
They reaffirm their desire to further develop dialogue
and exchanges between the two countries in the security
and defence fields, including through full utilisation
of the Comprehensive Security Dialogue, Defence Policy
Dialogue and Military-to-Military Talks. Service-to-Service
exchanges between defence establishments of the two countries
will also be strengthened. Recognising the importance
of ensuring the safety and security of international maritime
traffic, the two leaders directed the Coast Guards and
related agencies of both countries to work together on
a sustained basis, including the annual Indian Coast Guard-
Japan Coast Guard talks, joint exercises against piracy
as well as cooperation through means of information sharing
and technical assistance. The Indian Coast Guard and the
Japan Coast Guard will commence efforts to establish a
framework of effective cooperation. The two leaders, in
view of the importance of maritime security, also instructed
the Indian Navy and the Maritime Self Defence Force of
Japan to enhance their cooperation, including through
exchange of views, friendship visits and other similar
activities.
Science
and Technology Initiative
India
and Japan, as two countries seeking to transform into
knowledge-based societies, recognize the importance of
science and technology cooperation. The two sides note
in particular the areas of their respective strength,
and will work together to exploit the enormous potential
for cooperation in this field, including in the area of
high-technology. They will work together to launch a new
Science and Technology Initiative, which will explore
possible substantial cooperation in areas such as modern
biology, biotechnology and health care, agriculture, hydrocarbon
fuels, nano-science and technology, environment, information
and communication technology, robotics, alternative sources
of energy, etc. The Governments of India and Japan will
reinvigorate the India-Japan Joint Committee on Science
and Technology Cooperation, the next meeting of which
will be held later in 2005, and which will discuss the
modalities and implementation of this new Science and
Technology Initiative. The two Governments will also step
up cooperation in high technology, including by exploring
ways and means to expand high tech trade.
Cultural
and academic initiatives and strengthening of people-to-people
contacts
The
two leaders share the view that greater interaction between
the peoples, particularly among the youth, provides a
stronger basis for the relationship between the two countries.
They also recognize the importance of raising the profile
of India in Japan and of Japan in India. They firmly believe
that cultural and academic initiatives and stronger people-to-people
contacts will create the right environment for the leaders
of tomorrow to carry forward the vision of the global
partnership, and will build upon the goodwill that exists
in the two countries in respect of each other.
Accordingly, the Governments of India and Japan will work
together to promote Japanese language studies in India,
with a target of 30,000 learners at different levels in
the next five years, and through measures including the
introduction of Japanese language as an optional foreign
language in Indian secondary school curriculum. In this
regard, the Government of Japan welcomes and encourages
the Government of India’s initiative to establish Centres
of Japanese Studies at Indian universities and institutions
where Japanese language is being taught and to set up
Japanese language teaching cells in seven Indian Institutes
of Technology.
The
Governments of India and Japan will encourage people-to-people
exchanges especially among the younger generation, including
through student exchange and the Japan Exchange and Teaching
Programme; continue promoting cultural and academic exchanges,
which will be regularly reviewed and reinforced through
the Mixed Cultural Commissions; develop institutional
links between the Indian Council of Cultural Relations
and the Japan Foundation; establish a Japan Cultural Centre
of the Japan Foundation in New Delhi and an Indian Cultural
Centre in Tokyo; develop tourism related infrastructure
including the Buddhist pilgrimage circuit in India with
Japanese assistance; enhance two-way tourism and in this
regard, the Japanese Government will despatch a study
mission to India in 2005. The Governments of India and
Japan will also introduce a new academic exchange programme
involving ten designated educational institutions on either
side. The two sides will also make every effort to collaborate
towards the development of an Indian Institute of Technology
as well as the Indian Institute of Information Technology
for Design and Manufacturing, Jabalpur. The two Governments
will also hold a Festival of India in Japan and a Festival
of Japan in India in 2007/08 to commemorate the 50th anniversary
of the Cultural Agreement between India and Japan.
Cooperation
in ushering a new Asian era
The
two leaders realize and appreciate the importance of the
respective roles and responsibilities of their countries
in promoting peace, security and prosperity in Asia. Towards
this end, they intend to realise an East Asian Community
and work together to promote the vision of an Asian Economic
Community as an ‘Arc of Advantage and Prosperity’. The
Japanese side conveyed its decision to support India’s
membership in the East Asia Summit and the Indian side
expressed its appreciation for the Japanese support. The
Governments of India and Japan will also cooperate in
combating transnational organised crimes, and work together
for disaster mitigation, including earthquake, cyclone
and tsunami.
Cooperation
in UN and other international organizations
The
two leaders acknowledge the vital importance of the role
of the United Nations in world peace, stability, and prosperity,
and reaffirm their intention to work together for the
early realization of U.N. reforms, particularly Security
Council reform. They also stress the importance of revitalization
of the General Assembly, as it represents the general
will of all Member States, as well as the importance of
enhancing the efficiency of the U.N. agencies and organs
in the social and economic fields in order to effectively
address urgent challenges. In this connection, they stress
the importance of taking a decision on Security Council
reform before the Summit in September 2005, as the Secretary-General
recommended. They note with satisfaction the on-going
cooperation between India and Japan, including in the
G-4 setting, to bring about reform of the U.N. Security
Council, by expanding the membership of both permanent
and non-permanent categories, to make the U.N. more representative,
more credible and more effective. They reiterate their
support for each other’s candidature, based on the firmly
shared recognition that India and Japan are legitimate
candidates for permanent membership in an expanded Security
Council. They also stress the importance of moving the
process forward through consultation with a wide range
of like-minded countries, and decide to strengthen their
cooperation for this.
The
Governments of India and Japan will also expand and enrich
their cooperation in other international organizations,
including in the WTO. The two Governments will work together
to achieve the objectives enshrined in the Doha Work Programme
of August 1, 2004. As key players in global economic management,
the two Governments support an open, fair, equitable and
transparent rule-based multilateral trade system and intend
to work together to preserve stability and growth in the
global economy.
Responding
to international challenges
Recognizing
the threat posed by terrorism and the importance of the
international community working unitedly to counter this
menace, the Governments of India and Japan will further
consolidate their existing cooperation, both bilaterally
and in various international fora. The India-Japan Joint
Working Group on Counter-Terrorism will hold its first
meeting soon to identify possible future areas of cooperation.
The Governments of India and Japan will also work as partners
against proliferation. While expressing their respective
positions on the approaches towards the shared goal of
achieving a world free of nuclear weapons, the two Governments
affirm that they will seek to promote commonalities and
identify areas of convergence for mutual cooperation between
them in a constructive manner, contributing to the advancement
of overall bilateral relations.
The
two Governments will also strengthen their energy and
environmental cooperation, including on sustainable development
and environmentally sound technologies. In doing so, they
will ensure increased focus on energy security, energy
efficiency, conservation, and pollution-free fuels. They
will also cooperate in the hydrocarbons sector in the
areas such as exploration and production, and downstream
projects including in third countries as well as on improving
Asian oil markets and increasing investments in Asian
energy infrastructure.
SOURCE: Press Information Bureau, Federal Government
of India
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Japan
has identified four major areas of foreign investment, namely,
ICT, Biotechnology, Medical Care and Environment. Between 1995-2000
the Japanese ICT market is growing by 7.5%. The market is expected
to grow to ¥ 84 trillion by 2010 according to the Ministry of
Public Management, Home Affairs, Posts and Telecommunications.
By 2005 the market is expected to grow to ¥ 30 trillion. Five
prospective growth areas identified include: Electronic Automation,
Ides (internal data centre), ASPs (Application service Provider),
e-learning, e-commerce. After USA, Japan is the second largest
wired population. It is expected to grow to 870 mn by 2005 from
56 mn in 2001. Currently the ratio of Net users to country's
population is 44%. Japan aims at growing up as an IT Power House
by 2005. Digital Authentication is an area where foreign players
have an edge over other. It is estimated that the DA market
is likely to get a size of ¥ 41.9 bn by 2006. The ASP market
is likely to expand 18-fold by 2006. Small and medium sized
players are likely to control 30 percent of the market. The
Japanese e-commerce market is the second largest one in the
world. The market size in 2001 is estimated at ¥ 34 trillion.
The B2B sector boom is attributed to massive and growing requirements
of parts by the information equipment and auto industries.
The
Japanese biotech market estimated to be ¥ 1.33 trillion in 2001,
is world's second largest. The market is expected to grow to
¥ 25 tn by 2010. Investment potential areas identified include
Regenerative Medicine; Protein Analysis; and Functional Foods.
The deciphering of almost the entire human genetic blueprint
in 2000 has triggered off an accelerated race among foreign
drug makers to establish operations in Japan. There is no barrier
for foreign investors to enter the biotech market.
Medical
Care is yet another potential area that can attract foreign
investment into Japan. The welfare device and equipment market
for the nursing care which was estimated at ¥ 1.13 bn is likely
to grow to ¥ 2.2 bn. The Medical Healthcare Management &
Security System is another potential market for foreign investors.
By 2010, this market is likely to grow to ¥ 4.5 tn from estimated
¥ 1.3 tn in 2000. In next two years' time, the Nursing Care
market is estimated to be ¥ 3.98 mn.
Environment
is identified as one of the most potential area of investment
by foreign companies. The eco-business in Japan is estimated
to grow to ¥ 40.1 tn by 2010, according to the Japanese Ministry
of Environment. The waste disposal related market is expected
to grow to ¥ 40 tn by 2010. The environment market offers air
pollution control business; soil and water purification business;
effluent treatment business; and energy saving and alternative
energy business.
Updated
on June 7, 2007
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