Red Tape May Impede Better Ties With Japan

Japanese companies are yet to realise the full potential of the Indian market even after five years since it launched its economic reforms programme.

N Sei, member-secretary of the India Japan Study Committee, said the cultural difference is a major barrier to improved economic relations between the two countries.

By contrast, China is a much more favoured location among Japanese business houses and industry. Even if companies make 50 per cent losses in the first few years in China, they are willing to take risks and bear the costs. But in India, this is not the case, Sei said.

He said that in India, investment proposals have to cleared by a dozen of departments, which deters Japanese business from coming here. This not only delays decision-making, he said, but also tends to prolong the project period, leading to higher costs.

 

For example, even if a project is cleared by the Union government, it has to be approved again by different departments of the respective state government. Most Japanese companies find it a deterrent.

Besides, most of them find the intricate laws and bye laws of the country forbidding, which complicate matters further.

Sei said that very few Japanese companies would like to invest in the infrastructure sector in India, particularly in road development. In case of ports, the companies would like to examine the prospects of investment in detail, taking into account the benefits that would accrue to them on a long-term basis.

In the power sector, he said, Japanese companies have evinced interest in participating on a consortium basis. The general trend is that around 10 to 12 companies are interested in forming a consortium and bid for engineering procurement construction (EPC) contracts in the power generation sector.

They are, however, not interested in participating in BOT or BOO basis, he said.

The Indo Japanese Business Council has undertaken a study of the different states in the country to assess their potential in the power sector.

According to the latest report, four states including Maharashtra, have been shortlisted. Further data will be collected from these states to ascertain which state is the most feasible location for investment.

Sei said there is no noticeable trend that can be read out of the nearly 150 investment proposals that have come forward so far.

The India Japan Study Committee consists of 16 members, with equal representation from both the countries. The Indian side is represented by the Planning Commission members, while the Japanese panel was made up of members from the private sector business community. The committee meets once and sometimes twice a year, in India or Japan, to discuss norms and proposals to improve business relations between the two countries.

Former Japanese Prime Minister T Kaifu is the non-executive chairman of the forum.

The cultural difference is a major barrier to improved

conomic relations between been two countries. N Sei Member-secretary, India Japan Study Committee