Catch up with South Korea: Manmohan Singh

DEMOCRACY AT WORK/ OPINION

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 per cent 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 per cent 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 per cent 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.

(This is an excerpt from the prime minister's speech at the Indo-Japan Business Luncheon Meeting in Tokyo on December 15, 2006, during his official visit to Japan)