GOOD FEELING ALONE IS NOT ENOUGH
For the last 60 years India and Japan has warm and good relationship. India always marvels at the Japanese economic success. India also wants to write her own success. Japan has to help India for its economic development. India is the largest recipient of Japan’s ODA loans. But I have to say this “India doesn’t want loans, we want direct investment”. Investment in sectors that creates employment and contribute to the growth of Indian economy.
As of 2008, Japans trade with China is 25 trillion yen and with India is approximately 1 trillion yen. Why this difference ?. While Japan is implementing structural economic reforms, India is in the process basic economic reforms.
India does not seem to be a viable option for Japanese tourists, students or private investors. There is little accurate and trustworthy information about India in Japan. Most of the information in the Japanese language seems to be a rehash of popular newspaper articles. India is still not a great place for foreign investors or companies to do business. In a recent World Bank report called “Doing Business 2007” based on ten criteria, ranging from ease of initiating business and getting credit to enforcing contractual deals and exiting out, India ranked 134th out of 175 countries, while Japan came 11th and China 93rd. The top three countries in the report were Singapore, New Zealand and the United States.
Japanese investors have yet to develop skills to understand the legality of contracts if their business must succeed in India and exiting strategies if their business does not do well.
Indian students have to overcome the linguistic barrier and cultural barrier. Study Japanese language and Japanese culture. It will facilitate the co-operation between the two countries people. Japanese are wooing the best Indian students to come to Japan and study in their most prestigious universities where the numbers of Indian students is just a handful. Tokyo University has now decided to open a recruiting office in New Delhi, which can be used by any other Japanese university, to persuade the best India students to come to Japan. This will be a daunting task for Japan as Japan wants only the best students from India.
Indian businessmen first has to understand Japan is a non-legalistic society. For Japanese ‘word is word and it is given more importance’. So don’t give over commitment or false commitment. This does not mean Japanese don’t like contracts. Japanese do have contracts. But Japanese contracts are vague. When do business with foreign countries, Japanese adopt to local contracts. But be honest, India’s legal system takes long time to get justice, no body wants to get involved.
On the Government part the policy guidelines are not clear. Japanese investors feel that ground level hassles like labour laws, legal and regulatory framework are high in India. They consider procedural delays a major discouraging factor for potential investors. The infrastructure forms the backbone of development of any country. According to the majority of the Japanese investors, overall infrastructure facilities are lacking in India. To attract Japanese investment, Indian transport infrastructure needs improvement; power facilities are below average. The telecommunication facilities are however rated as "average".
A recent JBIC survey revealed India as the most favoured destination for long term Japanese investment. India is regarded by 70 percent of Jap manufacturers as the most attractive country to do business followed by China (67 percent), Russia (37 percent) and Vietnam (28 percent).
| However, the Japan Chamber of Commerce and Industry in India (JCCII) has drawn the attention of the Indian government to 61 issues relating to infrastructure, taxation system and customs clearance that need to be addressed to step up Japanese investments in India. The Chamber also identified Indian tax system too complicated. The land acquisition and utilization of procedures are also seen as a complicated and a major obstacle to facilitate Jap investments in India. |
Majority of the Japanese companies surveyed said that they are making profits and are "positively considering further expansion of their operations". However, to many of them, the inhibiting factors are differences in business practices, environment and culture etc but at the same time they are aware of India's huge market potential, especially in IT and IT-related.
For Indian investors, investing in Japan is pretty alluring. Japan, the business hub of Asia's growing economies is rated as world's second largest market. Apart from highly skilled human resources, Japan offers innovative technologies. So far as infrastructure back-up is concerned, the transportation network is rated as one world's bests. Other advantages to work with Japan include world-class information and communication technology ICT) facility, a highly reliable logistic infrastructure and other investor-friendly facilities. Responding to economic globalization, commercial laws and major elements of country's economic legal framework have been reformed by the Japanese government.
It is significant to note that many a foreign companies doing businesses in Japan have posted higher profit even than Japanese companies themselves. Japan has identified four major areas of foreign investment, namely, ICT, Biotechnology, Medical Care and Environment.
Good feeling between the two countries alone is not enough. It has convert into economic prosperity of the two countries.
