Dear Friends,

Fostering Synergetic Relations between
India and Japan

It is nice meeting you
again through thecolumns of Gateway.
Normal life has been
thrown out of gear due
to the recent floods inTa m i l N a d u . T h e
extremes in climatic conditions remind us thatnature is furious at the global inability to protect
the environment. Scientists say that global warming
is one of the main reasons for nature’s fury. We,
at IJCCI, are contemplating to start working again
on the Global Warming Programme that we hadlaunched sometime ago. Through a series ofprogrammes we plan to educate and enlighten thepublic on the importance of this theme and rededicate our efforts, with the help of interested
voluntary organisations. As responsible citizens, I
am sure all of you will agree with me and support
us in this cause. Suggestions from members on thiswill be highly appreciated.
IJCCI has inaugurated the Centre for JapaneseStudies on 31st October. On the occasion, aquarterly Research Paper was releasedby Mr. M.K. Narayanan, former Governor of West
Bengal. The IJCCI initiative was highly appreciatedby Indians and Japanese and we hope to contributevaluable programmes and thought provoking
Research Papers for the benefit of Indians andJapanese.

Hon’ble Mr. Seiji Baba, Consul-General of Japan inChennai, H.E. Mr. M.K. Narayanan, former Governorof West Bengal, and other dignitaries at theinauguration of the Centre for Japanese Studies andthe release of the first Policy Paper of the Centre
titled ‘Fostering Synergetic Relations between India
and Japan’ on October 31, 2015.

From L to R: Mr. N. Kumar, Mr. Seiji Baba, Mr. M.K.
Narayanan, Mr. B.S. Raghavan, Mr. D.S. Rajan, Dr. Sridhar
Krishnaswami.

Friends, the year 2015 is drawing to a close and I
take this opportunity to wish all of you a Merry
Christmas and a great 2016!
With warm regards,N Kumar
A cross-section of the audience.

Smart City – Ponneri
At a meeting with the top officials of
the Japan International Cooperation
Agency (JICA) in 2013, Tamil Nadu Chief
Minister J Jayalalithaa sought theagency’s support to fund business andinfrastructure projects in the state.
She was learnt to have asked the President of JICA, Akihiko Tanaka, to create
a separate line of credit to support private companies partnering with theGovernment in infrastructure projects.
In the budget for 2014-15, Union Finance Minister Arun Jaitley announced
that Ponneri would be developed as asmart city. Japan International Co-operation Agency (JICA) would prepare themaster plan for the Chennai-Bangalore
Industrial Corridor by March 2015.
In May, 2015, Commerce and Industry
Minister Nirmala Sitharaman said in a
written reply to the Rajya Sabha, thatmaster planning of the region(Krishnapatnam (Andhra Pradesh),Tumkur (Karnataka) and Ponneri (TamilNadu)) had been completed by JICAwhich had also listed 25 priority projects
in the CBIC region, which were at different stages of implementation. ‘The
government has entrusted the task ofpreparation of comprehensive regional
perspective plan, including master planand development plan for selected industrial nodes, along the ChennaiBengaluru Industrial Corridor (CBIC) to
JICA as nodal agency of the CBICproject.’ She said
Speaking with reporters on the sidelinesof the Global Investors Meet (GIM) in
September, 2015, senior representativeof Japan International Cooperation
Agency (JICA), Ichiguchi Tomohide said
the Ponneri Smart City project would
be done in three stages.
The Master Plan envisages developmentof the urban, manufacturing node near
Chennai spread across more than 20,000
acres of land at a total cost of Rs 32,713
crore.
The proposed city is expected to have a
population of four lakh and a working
population of 8.88 lakh by 2025. It
would be developed in three phases. The
first phase will involve 4,448 acres ofland available with government agencies while the second phase would in-Plan target, according to the masterplan.
Ponneri has been shortlisted among theeight prospective areas which comeunder CBIC, as it is ideally located near
Kattupalli and Kamarajar Ports to serveboth domestic and international markets.

volve 2,718 acres of existing port area.
The third phase will involve 5,667 acresof land with existing development
around coastal regulation zone.
The Chennai Bangalore Industrial Corridor (CBIC) has been predicted to realisethe vision to attain a growth rate??? of15 per cent per annum in manufacturing to meet the National Manufacturing

With the traditional strength of Ponneri
in automobiles and auto components,chemicals and petrochemical machinery,
the master plan has identified metallurgy,
electrical machinery, textiles and apparels, pharmaceuticals and medical equipment as potential areas of growth.
The master plan also proposes quality
and sustainable infrastructure for theresidents to ensure quality of life.
Source: Infrastructure Today, The New IndianExpress, The Hindu and The Economic Times.

Japan’s Gifts to the World of Science
Japan has contributed immensely to theworld of science and the year 2015 has
seen two Nobel Laureates from Japan.
Since 1949, there have been twentyfour Japanese (including Japanese born)
winners of the Nobel Prize, of which
eleven have been for physics, seven forchemistry, two for literature, three forphysiology or medicine and one for
efforts towards peace.
2015 Nobel Prize in Physics: The
Nobel Prize in Physics for 2015 was2

awarded to Takaaki Kajita (SuperKamiokande Collaboration, University ofTokyo, Kashiwa, Japan) and Arthur B.
McDonald (Sudbury Neutrino
Observatory Collaboration, Queen'sUniversity, Kingston, Canada) for thediscovery of neutrino oscillations, provingthat neutrinos have mass.
Takaaki Kajita, a Japanese citizen bornin 1959 in Higashimatsuyama, Japan, isa Ph.D. (1986) from the University ofTokyo, Japan. He is the Director ofMr. Takaaki Kajita.

(Continued on page 4)

Enchanting Kyoto was the imperial
capital of Japan for more thanthousand years, beginning 794. Overthe centuries, Kyoto was destroyed bymany wars and fires, but due to its
historic value, the city was dropped
from the list of target cities for theatomic bomb and spared from air raids
during World War II. Countless
temples, shrines and other historically
priceless structures survive in the city
today. Kyoto is also known as the “Cityof 10,000 shrines”. There are said tobe over 1000 Buddhist temples inKyoto. You’ll find true masterpieces ofreligious architecture, such as theretina-burning splendour of Kinkakuji (the famed Golden Pavilion) and thecavernous expanse of Higashi Honganji. Within the temple precincts aresome of the world’s most sublime
gardens, from the Zen masterpiece at
Ryoan-ji to the riotous paradise ofmoss and blossoms at Saiho-ji. And
then there are the Shinto shrines,monuments to Japan’s indigenousfaith. The mother of all shrines,
Fushimi-Inari-Taisha, has mesmerising
arcades of vermillion torii (shrinegates) spread across a mountainside.
Kyoto is also known for the frequentchanges in season and the effects on
the flora,that render the place more
beautiful, besides offering the entire
spectrum of Japanese cuisine.

Festival Season
Diwali

Kaarthigai

Hina Dolls

Golu

Christmas

New Year3

regulations require the investor to remit
Foreign Investment into India –the entire purchase consideration tothey provide a carve-out that
Holding Back Options for Investors India,
allows the investor to send theWith the government opening up moreand more sectors to Foreign Direct
Investment (“FDI”) in Indian companies,
there is growing interest of foreign
investors including Japanese investors toinvest in India. The latest Press Noteissued by the Department of Industrial
Policy and Promotion on 10th November
2015 has relaxed FDI norms in 15 sectors
including mining, defence, construction,real estate, civil aviation, broadcastingand LLPs. New sectors for FDI such as
plantation activities and white label
operations for ATMs have been opened
up for foreign investment. Repatriationof the foreign investment has also been
opened up for certain sectors. Crossborder acquisition by way of a transferof shares of an Indian company fromthe Indian shareholders to a foreign
investor is often used as a means for a
foreign investor to enter India and has
proved fruitful for both the foreign
investor and the Indian entities.
A major concern for investors in shareacquisitions world-over is that theinvestor seeks to cover his risks at thetime of an acquisition by looking at adeferred payment structure or by holdingback certain payments. This would imply

making part payment upfront and paying
the remainder only on the fulfilment ofcertain conditions or at a certain specified time in the future. By reserving somepayments for the future, the buyer/
investor seeks to cover certain risks
including breach of representations orwarranties by the selling shareholder/target company, incentivising the growthof the company, incentivising continuance of employment of key employers,
etc.
Japanese investors proposing to invest
in India should be aware that deferredpayments in relation to FDI in India(including by way of share acquisitions)require prior approval of the Reserve
Bank of India (i.e. RBI, India’s CentralBank) and this may be a concern wheretime is of essence in an acquisition.
While approval is required for deferredpayments, fortunately, the FDI policy
grants foreign investors certain leeway
with respect to holding back amounts
to cover indemnities. FEMA provisions
recognise that foreign buyers/investors
often require an indemnification carveout and will need some protection towithhold part of the consideration
towards these indemnities. While theconsideration amount to an escrowaccount with an authorised Bank in India(in INR) and instruct the Bank to
holdback certain amounts towards
indemnities. Such an escrow structure
would not require prior RBI approval (aslong as it is for no more than six months)
and only provides for hold backconcerning indemnities.
The structure thus allows foreign
investors to cover some of their risks
and hold back part of the consideration
amount towards indemnities. Of course,
if the foreign investor is not constrained
for time, the RBI approval route for adeferred payment consideration structure
may still be an option.
These escrow carve-outs to protect
investors, as well as the new changes
brought in by the latest DIPP Press
Note (of November 2015), increasing
the permitted sectoral caps, opening
up new sectors to the automatic routeand easing several conditions under
existing sectors, serve to positively
impact the investment atmosphere inIndia. It is hoped that this will also
encourage further investments fromJapan and greater synergies between
India and Japan.

Japan’s Gifts to the World of Science(Continued from page 2)

Mr. Satoshi Omura.

parasitic worms, which affect one-thirdof the world’s population, especiallyprevalent in South Asia, Africa andCentral and South America.
The Japanese Government awarded theOrder of Culture, Japan’s top award forcontributions to culture, to both Omuraand Kajita. The awards were received
from Emperor Akihito at the Imperial
Palace.

discoveries against Malaria. Omura andCampbell were honoured for their workon the drug Avermectin to control

Sources: Nobelprize.org (The Official Website ofthe Nobel Prize), Articles in the Japan Timesand Wikipedia.

Institute for Cosmic Ray Research andProfessor at University of Tokyo,
Kashiwa, Japan.
2015 Nobel Prize in Physiology orMedicine: The Nobel Prize in Physiology
or Medicine 2015 was awarded jointly
to Satoshi Omura and W illiam C.
Campbell ‘for their discoveries
concerning a novel therapy against
infections caused by roundworm
parasites’ and Youyou Tu for her

EDITORIAL BOARD: N Kumar, President, IJCCI; N Krishnaswami, Chairman, IJCCI; Krishna Prasad, Managing Director, Mot Juste Communication
Services Pvt. Ltd.; P S Suman, Partner, A K Mylsamy & Associates LLP; Hufriz Wadia, Partner, Kochhar & Co.; Arjun Balakrishnan, Founder, Dharmic Solutions;
Suguna Ramamoorthy, Secretary-General, IJCCI. For Private Circulation Only.
Editor: Suguna Ramamoorthy; Publisher: IJCCI; Designing & Printing: Mot Juste Communication Services Private Limited, 98410 15081.
This issue ofis sponsored by A K Mylsamy & Associates LLP.

Indo-Japan Chamber of Commerce & Industry (IJCCI): No. 21, Kavignar Bharathidasan Road, Teynampet, Chennai 600 018, Tamil Nadu, India.
Phone: 044-24352010 / 044-24354779. Email: indo-japan@ijcci.com. Web: ijcci.com