India – Japan Business Leaders Forum

There is a high degree of complimentarity between the economies of India and Japan, like the demographic structure of India and the increasingly aging population of Japan.

The Japanese economy is characterized by production structure that is highly capital-intensive and India’s production structure is dominated by the labour- intensive activities.  The export structure of the two countries also shows a good degree of complimentarity, Japan has core-competency in hi-tech and industrial goods, whereas India is increasingly becoming a manufactured goods exporter, besides the fact that India has comparative advantage in agricultural goods.

Bilateral trade between India and Japan increased by 34% in 2012 -13 $ to 18.5 Billion compared to $13.7 Billion in 2011 -12. The two countries had set a target of doubling bilateral trade to $ 25 billion by 2014.  Besides trade India and Japan have great potential to develop strategic economic partnerships into an alliance based on mutual complementarities and geopolitical significance.

Coinciding with the visit of the Prime Minister of India Dr Manmohan Singh to Japan on 29 May 2013, the 4^th meeting of the India – Japan Business Leaders Forum will discuss:

• Japan-India CEPA and regional economic alliances;
• improving the business environment and market access;
• Infrastructure Development in India and Promotion of Japan-India Cooperation, with a key focus on the DMIC project and the Chennai Bengaluru Industrial Corridor;
• Strengthening Indian and Japanese Cooperation in Strategic Areas like energy ( including nuclear), automobiles, machinery, chemical industry, cutting-edge technologies in areas such as electronic hardware, telecommunication equipment, heavy industries, rail transport management systems, as well as technological exchanges in agriculture and environmental management
• development of high-caliber human resources as a form of “soft infrastructure” for promoting joint projects in strategic fields; cooperation to promote skills enhancement through initiatives like training and certification, bilateral student exchanges, and corporate internships
• Cooperation in the Asia-Pacific Region.

A Joint Statement will be presented to Prime Minister Singh and Prime Minister Abe after the meeting by the members of the Forum from both Indian and Japanese side at KANTEI ( Japanese Prime Minister’s residence).

Some achievements of the Forum have been – Permission for Japanese Mega banks to open their branch offices at city centers; Relaxation of regulations to JBIC providing for Swap Status for JBIC and its Non-Resident Co-financiers for DMIC project.;  Subscription of Social Security Agreement and Launch of an India-Japan US $ 4.5 billion DMIC facility, equity participation and provision for inclusion of board members from the Japanese government to the DMICDC

Mr Baba Kalayani , Indian Co– chair  of the Forum will be accompanied by senior business leaders including Mr S Gopalakrishnan, President CII & Executive Co – Chairman, Infosys Technologies; Mr Chandrajit Banerjee, DG – CII, Mr Vikram Kirloskar, Vice Chairman, Toyota Kirloskar Motor; Mr Amitabh Kant, MD & CEO, DMICDC; Mr Sunil Kumar Srivastava, CMD, Oil India and Dr Surinder Kapur, Chairman, Sona Koyo.

Let’s dance with the dragon!

Over the last decade, a series of top-level political visits between India and China has established a new trajectory of engagement. A conducive atmosphere for bilateral economic cooperation has been created and strengthened. Trade between the two Asian giants has soared from just over $7 billion in 2003-04 to $67.8 billion in 2012-13. Indian companies have entered the Chinese economy with cumulative pledges of over $1 billion. Chinese investments in India aggregated $657 million by October 2012.

The scope for further investments in both directions is high, and industry of the two countries should leverage the strong direction shaped by the governments to take our multidimensional economic engagement to a new level.

To translate new opportunities into mutual gains, both sides can now aim at going beyond trade and investment to real development cooperation. Sharing of best practices and models in areas such as skill development, healthcare, participatory governance, and other development fields could offer rich benefits.

India has made good progress in life sciences industries such as biotechnology and pharmaceuticals. By sourcing drugs from India, China could offer better healthcare services to its citizens. Similarly, China has taken great strides in rural development through its town and village committees, which have decentralised economic development. India could learn from this model for empowering its 600,000 villages.

Likewise, while China has developed high capacity in advanced manufacturing and technology-rich electronics, India has built an impressive software and IT services sector. The convergence of the two is already taking place as global companies source hard and soft inputs from both countries. A real partnership between the two countries could take this convergence to the next level.

China’s cities and urban development has been one of its major success stories. Transport, low-cost housing, sanitation, water management and related sectors have attained high efficiencies in the country. India too is embarking on an ambitious project of building clean and green manufacturing townships. The participation and investments of Chinese companies could go a long way in devising best models for India.

We also need to learn from China’s renewable energy prowess. We see opportunities for growth across all conventional areas such as manufacturing, services, infrastructure and the financial sector.

The current bilateral trade scenario offers some concerns with respect to the trade imbalance, low value addition of Indian exports to China, and concentration on a few items. To redress this imbalance and make trade more sustainable, it is necessary to incentivise Indian exports to China. More transparent laws and procedures, mutual recognition of standards and harmonisation of conformity assessment procedures, and greater cooperation in trade finance could help this process.

India and China stand at a historical juncture where global affairs are transforming. Innovative cooperation mechanisms, especially in economic engagement, could stimulate a new sustainable partnership within this changed context.

Author: Chandrajit Banerjee is Director General of Confederation of Indian Industry (CII)