India: Interview Bilateral Trade in Asia: The Common Interest of India and Japan
Director General, Japan External Trade Organization (JETRO), Hidehiro Ishiura speaks on Indo-Japan relations and the benefits it offers.
The year 2014 saw an increase in the number of Japanese business establishments in India. According to you, what are the reasons for Japanese companies wanting to set up their companies in this part of the globe?
The huge potential that the Indian domestic market offers is a major factor that influences the investment decisions. Various studies have projected that by 2030, India is poised to become the third largest economy in the world. The purchasing power of the Indian middle class is also expected to be ranked at number one around the same year. In addition, India offers a comparative advantage in terms of skilled workforce and cost competitiveness, making it a suitable destination for export oriented manufacturing. The geographical advantage that India possesses also favors exports to African and Middle East countries. Automobile and engineering related sectors form a major chunk of the overall Japanese investments in India.
With the demographic dividend favoring India, there would be a huge demand for automobiles in the coming years fueled by rising incomes and easier access to financing.
Availability of quality human resource is another reason that has significantly influenced investors’ decision in locating their investments—beneficiaries of which have been states like Tamil Nadu that are doing well in the education sector. I am told that Tamil Nadu turns out more than one million graduates annually.
How is Japan External Trade Organization (JETRO) working with organizations in India to build mutual trade and investment?
JETRO works closely with the Central and respective State Governments in facilitating trade and investments. We also closely cooperate with the leading trade bodies and industry associations like CII, FICCI, ASSOCHAM, ACMA, SIAM, AIEMA, MCCI, etc. JETRO coordinates Japan’s participation in major trade shows and also facilitates trade delegations both to and from Japan. We also organize seminars and road shows to support the State Governments’ in promoting their respective States to potential investors in Japan. We also occasionally sponsor buyer delegations to Japan. JETRO has also supported Japanese Prefectures and Indian State Governments in entering into MOUs that are mutually beneficial.
Most Indian companies constantly try to improve their productivity and working environment by introducing and practicing Japanese best practices. As an organization, how do you help develop these practices in helping companies expand and establish themselves in India?
Japanese manufacturing techniques and practices like kaizen, quality circles, TPM, just-in-time, etc., are being implemented quite extensively in the Indian industry. The number of Deming Awards won by the Indian industry is a testimony to this. JETRO cooperates with organizations like The Overseas Human Resources & Industry Development Association (HIDA) and Alumni Associations (AOTS) in propagating these initiatives. These organizations have mentors who have been trained in Japan and on their return they disseminate their knowledge through various workshops that are conducted regularly. Such training programs have contributed significantly to the industrial HR development in countries like India.
What are the challenges you face in a country such as India in terms of ease of doing business, and setting up shop in the country?
Japanese companies operating in India generally point out that institutional impediment to doing business in India includes matters related to land, taxation, environmental clearances in addition to matters related to infrastructure development. According to the ranking of doing business 2016 by World Bank, dealing with construction permits, enforcing contracts, etc., are critical issues that need to be addressed. In India, there is no dearth of laws and regulations, but what is required is the proper enforcement of these laws within a time bound manner. The undue delay in effecting a legal settlement is a damper for investments.
It is quite heartening to note that recently the administration has taken note and is moving fast to arrest the decline. More than anything else, the realization among the Government that business environment needs to be drastically overhauled, so as not to miss the investment bus, is a big step forward. It is also good that there is a healthy competition among various states in India to attract investments. Such a competitive environment is a catalyst for faster development of economy.
Thank you for the interview.