Message from Ambassadors

Prospects of Indian Economy &Indo-Japan Relations
Deepa Gopalan Wadhwa
Ambassador of India to JapanI

t is a pleasure to reach out to the readers of “Kaigai Toyushi” on prospects of the Indian economy, opportunities
for investment in India and India-Japan economic relations.
With the formation of a new government in New Delhi lastyear and the initiatives it has taken, prospects for India’s
economic growth have improved dramatically. The IMF’s
World Economic Outlook Report, released in January
2015, expects India’s growth to be 7.4% in 2015 and tosurpass that of China in 2016. The Government of India hastaken several measures to enhance the pace of economic
reforms. These include the passing of bills on coal mines
allocation and labour reforms. The FDI limits in defence,
insurance, pension funds and railways have been raised;
several defence products have been delicensed for private
investment and the FDI regime for real estate has also beenliberalized. The new Government has pushed forward thereforms agenda focusing on infrastructure development,manufacturing, skill development and financial inclusion.
The environment of ‘doing business’ in India is being improved by ushering in stable, predictable and transparent
regulations, reducing the time for registration of businesses
to one day and increasing the spread of e-governance. TheCompanies Act has been amended, land acquisition procedures have been simplified for industrial projects and thetax structure is being rationalized to change the perception
regarding our tax policy. A national consensus is being
built to amend the constitution to implement the Goods andServices Tax (GST) and to roll it out by April 2016; therecent Budget has also announced a roadmap for reducing
corporate taxes to 25% (from 30%).
The Government has initiated the ‘Make in India’ programme, which aims at raising the competitiveness ofIndia’s manufacturing sector by inviting top global compa-

nies to set up their manufacturing bases in the country.
Global companies can take advantage of India’s Demography, Demand and Democracy - three unique features which
exist only in our country. Several leading companies suchas Siemens, Bosch and GE have already responded positively to the campaign. There is also an ambitious
programme underway for infrastructure creation and renewal. These include investments in urban transport
networks, smart cities, highways expansion and development of industrial corridors.

Looking at the growing exchanges between India andJapan, the Special Global and Strategic Partnership,
between the two Asian democracies, is poised for take-off.
The Prime Minister’s visit to Japan in September last year
and setting up of a special management team -“JapanPlus”- to fast track Japanese investment in India is seen asa path-breaking step for stronger economic engagement
between our countries. There are self-evident complementarities that exist between our two economies: while Japan
has an abundance of capital and cutting edge technology, it
faces a dwindling market and population. The Indian economy is characterized by a booming market, fuelled by theJapan-India Summit Meeting (September 1, 2014)

Mrs. Deepa Gopalan Wadhwa arrived in Tokyo on 8 August 2012 to take charge as Ambassador of India to Japan.
Mrs. Wadhwa joined the Indian Foreign Service in 1979. She has served twice in Beijing andspeaks Mandarin. She has also worked on the Pakistan Desk in the Ministry of External Affairs
in the late 80’s. She has extensive experience with multilateral work and has covered issues likehuman rights, disarmament, environmental and social issues in the UN and has also worked forInternational Labour Organisation (ILO) as head of their International Programme for Elimination of Child Labour (IPEC) in New Delhi in 2001.
Mrs. Wadhwa has earlier done postings in Hong Kong, Geneva, and The Hague. She served
as the Head of UN division in the Ministry of External Affairs and thereafter was appointed theAmbassador of India to Sweden & Latvia. Prior to taking up her assignment in Japan, Mrs.
Wadhwa was Ambassador of India to the State of Qatar.

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growth of an aspirational middle class, but faces an infrastructure deficit and needs access to technology especiallyin manufacturing. It is not surprising, therefore, that ourleaders have announced an Investment Promotion Partnership with the joint objective to invest Yen 3.5 trillion into
India, doubling Japanese FDI and the number of Japanesecompanies in India in the next 5 years.
India-Japan economic relations have tremendous potential
for growth and expansion. The two nations signed a Comprehensive Economic Partnership Agreement in Feb 2011.
Though the volumes of our annual bilateral trade at over 17
billion dollars is far below par when compared with Japan-China and India-China trade, expected tariff cuts andefforts on both the sides could lead to a jump in the future.
Japanese companies’ investment in India stand cumulatively at $18 billion (2000-2014), making Japan India’s 4thlargest foreign investor. Japanese ODA has supported India’s economic development in priority areas such aspower, transportation, environment and in social sectorssuch as health and education.

The Delhi-Mumbai Industrial Corridor (DMIC) is amodel of Indo-Japanese economic cooperation. Started in August 2007, the DMIC project will be implemented
on either side of the 1483 km long Western Dedicated Rail
Freight Corridor between Dadri (UP) and JNPT (NaviMumbai). The project seek to create a strong economic
base with a globally competitive environment and state-ofthe-art infrastructure to activate local commerce, enhanceinvestments and attain sustainable development.
The JBIC Survey for 2014 has ranked India as the most
preferred destination for Japanese manufacturing companies - an encouraging sign for the future of Indo-Japaneconomic relations. Japanese cars already dominate the Indian market and automakers are expanding their production
bases in India, targeting
not only thedomestic
market but
making India the hubfor exports
to West Asia
and Africa
on one hand,
and South &Southeast
Asia, on theother. Similarly, heavy
electricalmachinery
manufactur-Delhi Metroers and trading houses are also eyeing the growth in India’s
power equipment market. Profitable sectors that could attract Japanese investment include Smart Cities, rejuvenationof rivers, high speed railway, infrastructure, renewable energy, electronic hardware and life sciences. The mega
infrastructure projects of the Western Dedicated FreightCorridor, which draws on a STEP loan, wherein the bidding process favours Japanese companies, the DMIC andCBIC offer unprecedented opportunities for Japanese industry and products to enter India.
There has been a perception among Japanese companies
that India is a vast territory, marked by diversity and challenges. To facilitate new businesses, the Government ofIndia has taken several policy decisions, some of which aremeant solely for Japanese companies. Now, Japanese industrial parks are being set up in key states with state of theart infrastructure – tackling the issue of land acquisition,power and environmental clearance that confront individual investors. Japanese banks are also opening branches insuch parks to service their clients. These industrial parks,
several of which are functional and others are in the pipeline, will play an important role in transforming theinvestment environment for Japanese companies in India.

F

rom time immemorial, whenever Indians and Japanese
have come together, they have struck a deep chord ineach other. Our countries are joined by convergent interests, critical maritime inter-connections and growinginternational responsibilities. We share a commitment topeace, international rule of law and an open global trade
regime. India-Japan relations draw strength from the exceptional consensus on the significance and potential ofthis relationship across the political spectrum and people inall walks of life in the two countries. This taken together
with the complementarities in our economies createsboundless opportunities to work together.
For further information, please contact
Arvind Singh, Minister (Economic)Abbagani Ramu, Counsellor (Commercial)
Embassy of India
tel: 03-3262-2391 / fax: 03-3234-4866

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