Government of India at a Seminar on Doing Business in Japan

An Indo-Japan Comprehensive Economic Partnership Agreement (CEPA), covering Trade, Investments services, etc. is at an advanced stage of negotiations between the two countries. The agreement is designed to facilitate and deepen the economic co-operation between the two countries. Second round of negotiations to finalize the Agreement will take place between the representatives of the two countries in September this year.

This was disclosed by Dr Ajay Dua, former Secretary, DIPP, Government of India at a Seminar on Doing Business in Japan, organized by the PHD Chamber jointly with Department of Industrial Policy and Promotion (DIPP), Government of India and Japan External Trade Organization (JETRO), today in New Delhi.

Dr Dua also mentioned that by September this year, a major support program for building the Western India Industrial Corridor with the help of Japanese assistance would be rolled out. That would help increase inflow of Japanese investment into India, particularly in sectors like roads, airports, ports, logistics etc. By next year, the Japanese investment in India should touch US$ 2 billion annually, he added.

Dr Dua stressed that those Indian firms desirous of setting up business ventures or investing in Japan should be aware of the business practices, cultural mores and administrative procedures there. The Japanese businessmen, whose affinity for developing long-term relationship with the business partners and vendors is legendary, comply with contractual obligations in letter and spirit. Yet, penetrating into the highly competitive Japanese markets is difficult. Their stress on quality, just in time delivery, technology excellence, etc. are challenging to any businessmen including from the western countries. Knowledge of English is an advantage but not a limitation while doing business in Japan, he added.

Giving details about the possible difficulties that a business man would face while doing business in Japan, Dr Dua underlined that real estate costs are exorbitant as also the distribution costs. Overseas businessmen would also face difficulties in penetrating the established network, and fulfilling the complex administrative procedures. At the same time, Japan wants to increase the share of its FDI in the GDP to 5 per cent in 2010, from the present level of 2.5 per cent.

The fact that being a developed country the growth rate of Japan was 3 to 3.5% in the last 3 years compared to the world average of 2.7% was a sign of the positive economic growth of Japan. Dr. Dua also stressed on the fact that Japan is a consumer driven economy and a country where technology keeps evolving. Japan spends 3.5% of its GDP in technology development.

Mr N Noguchi, Director General, JETRO, New Delhi while mentioning about the forthcoming visit of the Japanese Prime Minister to India said that the economic co-operation between the two countries would get a boost since there was an innate desire of both the countries to come closer. He also said that Japan was keenly looking forward to have large scale Indian investments. He also pointed out that Japan’s overseas investments are gone up phenomenally since 2003. Of the 600 overseas investments made by Japan since 2003, 145 of them are in the Asian region including in India.

In his welcome address, Mr Yogesh Munjal, Chairman, Japanese Desk, PHD Chamber mentioned that both the economies are highly complementary in terms of factor endowments, capabilities and specialisations. Some Indian companies are already operating in Japan in the sectors of gems & jewellery, marine industry, tourism, IT, and restaurants. Many IT companies are now expanding their businesses in Japan..

He also said that Indian investment structure should be diversified to cover sectors like bi-technology, auto components, drugs and pharmaceuticals etc besides the growing relationship in IT sector. He also mentioned about PHD Chamber conducting Japanese Business Language Proficiency Tests in New Delhi to equip the businessmen and professionals from India for doing business in Japan.