Japanese trade agency wants investment climate to improve

February 19th, 2007

Notwithstanding the economic reforms and liberalisation measures undertaken by India over the years and the business opportunities that exist, potential Japanese investors find the investment climate in the country difficult.

Infrastructure constraints, difficult labour laws, bureaucratic bottlenecks and over-regulation are of concern, and India ought to accelerate the process of liberalisation, said Osamu Watanabe, chairman and chief executive officer of the Japan External Trade Organisation (JETRO).

Though the manufacturing sector had been liberalised, issues remained for investors, including those relating to exit policies and restrictions on joint ventures. India also needed to open up the services and financial sector faster, Mr. Osamu told The Hindu on Friday after addressing a meeting organised here by the Indo-Japan Chamber of Commerce and Industry. Underlining the significance of an investor-friendly climate, the head of the investment promotion wing of the Japanese Ministry of Economy, Trade and Industry said India should make extra efforts on this front as competition among countries to attract investments was growing.

On the concerns of Japanese investors in China, Mr. Watanabe said the situation had changed following the visit of the Japanese Prime Minister to China last year. With the Chinese Premier expected to visit Japan in April, things were expected to improve further.

However, although only economic reforms have taken off in China, political and judicial reforms were awaited. Hence, the Japanese had a better level of comfort doing business in India. But efficiency levels and the investment climate need to improve. The emphasis in such a comfortable democracy should be on improving efficiency. “It is very important for India.”

Mr. Watanabe said there were tremendous opportunities for India and Japan to work together. He expected that outstanding issues would be sorted out with India and Japan launching negotiations on a Free Trade Agreement. “Both sides will make efforts to liberalise… ” he said.

The recent initiatives by India to attract foreign investors had been received well in Japan. A pointer to this was the fact that one-third of the nearly 475 Japanese companies with a presence in India had made their investments over the last one year.

On his meeting with the Chief Minister, Mr. Watanabe said he detailed the proposed Delhi-Mumbai industrial corridor, in which JETRO would be involved, and highlighted the importance of establishing a Chennai-Bangalore industrial corridor. It could link up Bangalore, which is strong in information technology, with Chennai, whose strength was its strong manufacturing base. He hailed the role of the Indo-Japan Chamber of Commerce and Industry (IJCCI).

At the meeting, IJCCI president R. Veeramani and secretary general N. Krishnaswami said the chamber would continue to facilitate Japanese investment. Director of Industries and Commerce M. Raman, and Director of Tamil Nadu Industrial Guidance and Export Promotion Bureau M. Velmurugan, highlighted the advantages of investing in the State.

Japanese Consul-General Yoshiaki Kodaki, Chamber vice-chairman and managing director of The Hindu N. Murali and Hindustan Chamber of Commerce president G. Subramanian were among those who attended the meeting.