PM hardsells India, to address foreign investors

Tokyo, Dec 15: Prime Minister did some hard selling of the business opportunities in India and promised foreign investors that the government would address all their legitimate concerns, especially those related to infrastructure, taxation, tariffs and red tape.

He also urged Japan to try and retrieve the ground it had lost to other East Asian and South-East Asian countries in India and regain its historic status as India's most important business partner in Asia.

In this context, he advised them to weigh the initial problems of entry against the long-term profitability and stability of doing business in India.

''I am aware of the concerns Japanese investors have about doing business in India. Our government will address all legitimate concerns of investors,'' he said at a business luncheon organized jointly by the Apex Chambers of Japan and India.

''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 best,'' he said.

The Prime Minister said the focus of his government had been to create world class infrastructure in India and that he was personally monitoring all the major projects at every quarter.

''We have estimated that India needs investment of at least 320 billion dollars in the next five years in infrastructure alone. We have estimated that our total investment requirement would be closer to 500 billion dollars,'' he said.

Regarding public and private, domestic and foreign participation in all sectors in India, Dr Singh said ''We happily welcome foreign investment and seek to promote public-private partnership.'' He, further, said as part of such public-private partnerships, the government had made provisions for grant assistance through a specially created "viability gap funding" mechanism and for access to long-term funds through a special purpose vehicle, the Infrastructure Development Finance Company.

''We will continue to explore all ways and means to further our efforts to improve India's infrastructure and bring it up to international standards,'' he promised.

Dr Singh said he and his Japanese counterpart Shinzo Abe were "sincerely and deeply committed" to breathing new life into the relationship between the two countries. He said they would launch negotiations on a Comprehensive Economic Partnership Agreement (CEPA) between India and Japan.

''In the years ahead, we wish to focus on building a much deeper and wider relationship with Japan's business and industry,''he said.

According to him, the bilateral economic relations presently fell far short of the potential.

Dr Singh said he was 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. He pointed out that Korean consumer brands had moved aggressively into India and had very high recognition value among Indian consumers.

Similarly, India's trade with both China and Korea was booming and grew last year at around 40 per cent with both countries, he pointed out.

''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,'' he said.

The Prime Minister said India could not forget the critical role Japanese companies had played in the development of the automobile and other industries in India. ''The challenge is before you. I invite you to take it,'' he said.

Dr Singh said he was happy that there were indications that the trend was already beginning to change., with over five billion dollars invested from Japan in India's capital markets since the end of 2004.

''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,'' he said. He also noted that the number of Japanese companies in India had grown by 50 per cent in the last three years.

In this regard, the Prime Minister pointed out the results of a survey conducted last year by the Japan External Trade Organisation (JETRO), which concluded that the profit prospects of Japanese manufacturing companies were 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 operations in the next one or two years, he said.

Dr Singh said an economically resurgent India offered a variety of investment opportunities, both in traditional and new sectors, in labour-intensive and knowledge-based industries.

''In biotechnology, nanotechnology, information technology, automobiles and aerospace, textiles and leather, marine products and many other areas, Japan and India can come together,'' he felt.

He said he was convinced that knowledge-based industries offered tremendous opportunities for partnership between Japan and India.

''India's proven strength in software and Japan's global reputation for quality hardware make us natural partners in high technology industries,'' he said. The Prime Minister underlined the fact that for the next few decades, India would have a young population with large numbers entering the workforce. He said the qualitative and quantitative expansion of education in India would enable the country to sustain a highly productive workforce with a wide range of skills.

He noted that there were already more than 70 Indian software companies and 5000 Indian engineers operating in Japan and that Indian companies were making significant efforts to train software professionals for the Japanese market. He said Japanese had already been introduced as an optional foreign language in Indian secondary schools and the government was committed to increasing Japanese language learning opportunities.

''Nonetheless, it must be said Japan has not exploited India's IT advantage the way the US and Europe have,'' he observed.

The Prime Minister also stressed that India's fast expanding economy would create a large demand for energy, offering many opportunities for collaboration between Indian and Japanese companies in the area of energy efficient and environmentally-friendly technologies.

''I invite all of you to a youthful, dynamic and confident India, where more than a billion people are seeking socio-economic progress in the democratic framework of an open society and an open economy.

I invite you to join us in this historic journey of creativity and enterprise.

''I am convinced that the 21st Century will be the Century of Asia. But to ensure this and to translate this into global prosperity and peace for all, Japan and India must work together. I invite you to join us to build a new India, a new Asia and a new world,'' he said.

The Prime Minister said the Delhi Metro was a visible symbol of India-Japan collaboration and looked forward to more such projects that could make a tangible difference to the daily lives of Indians.

Dr Singh took the opportunity to thank Japan for the helping hand it extended to India during its balance of payments crisis of 1991.

''Japan was truly a friend in deed, to an India sorely in need,'' he remarked.

He also dwelt at length on the progress achieved by the Indian economy, underlining the fact that it had recorded eight per cent growth in the past four years and a new high of 9.1 per cent in the first half of the current fiscal. He said this growth had been led by an investment rate of 31 per cent of GDP, financed almost entirely by a matching savings rate of over 29 per cent.

''India's stable macro-economic indicators lead me to believe that we have the potential to achieve double-digit growth in the coming years,'' he said.

But he emphasized that the challenge was not only to sustain high growth rates but to make this progress inclusive of the demands of equity and environmental sustainability. He said the growth so far had helped millions emerge from abject poverty, and added large numbers to the country's booming consumer markets.

''In this journey of unleashing the creativity and enterprise of the Indian people, and seeking growth with equity, we want Japan to be our partner,'' he added.

UNI