TOKYO: Japanese Prime Minister Yoshihiko Noda today said companies here can offer technology to Indian firms and collaborate on various projects to strengthen the bilateral relations between the two nations.
"India is growing rapidly, while Japan has technology which it can contribute," he said at the India-Japan Business Summit jointly organised by CII and Japanese industry chamber Keidanren here.
There is a potential to further strengthen the bilateral relationship, and the private sector in both the countries is working on building stronger ties in trade and investment.
Bilateral trade between India and Japan was USD 13.82 billion in 2010-11. India's exports to Japan mainly includes petroleum, gems and jewellery, transport equipment and machinery, while imports include iron and steel, electronic goods, chemicals and metals.
The two countries have signed a Comprehensive Economic Partnership Agreement. Both the sides expect that it would boost bilateral trade to USD 25 billion by 2014.
Talking about Japan's collaboration in Delhi-Mumbai Industrial Corridor (DMIC) which envisages the establishment of several industrial cities across seven states, Noda said, "We have a great wish to cooperate in Dedicated Freight Corridor."
Japan is now looking at closer economic ties with the world's second-most populous nation to revitalise its economy after the March 2011 earthquake that triggered a massive tsunami causing widespread devastation.
Noda said in Japan's economic reconstruction, iron-ore is an important raw-material. "We import iron-ore from India and also we are able to see renewal of it (contracts for exports from India)."
India's state-owned trading giant MMTC has inked pacts with five Japanese companies including Nippon Steel Corporation, JFE Steel Corporation and Nisshin Steel to supply 2.3 million tonnes of iron ore per annum for a period of three years. Besides, the company would export iron-ore to South Korean major Posco.
The supply of iron ore, although in smaller quantities, has been a core element in the bilateral ties with Japan which would further strengthen the relations.
MMTC's earlier contract to supply iron ore for five years to Japanese firms had expired on March 31, 2011 and was pending as price negotiations had not taken place.
India, the third-largest global exporter of iron ore, had shipped 97.64 MT iron ore in the 2010-11, down from 117.3 MT in 2009-10.
Japanese firms can offer technology to India and collaborate: Yoshihiko Noda - The Economic Times
Despite stalled reforms, FDI inflows rise 34% in 2011-12
A number of big-ticket deals, less negativity at the beginning of the year led to the increase
While the government reels under severe criticism for not taking adequate measures to open a few sectors to foreign direct investment (FDI), hurting the sentiment of foreign investors, the inflow into the country in the last financial year belies these comments.
In 2011-12, FDI rose 34.4 per cent to $46.84 billion, compared with $34.84 billion in 2010-11 and $37.74 billion in 2009-10, according to data from the Department of Industrial Policy and Promotion.
Experts say the rise in FDI inflows is due to the fact that India remains a preferred investment destination, but this trend may not continue for long and moderation may take place this financial year. This is because there was less negative news from across the globe at the beginning of the previous financial year, compared to the current one.
The rise in FDI equity inflows in the previous financial year, compared to the one earlier, was because of some big-ticket deals, especially in the chemical and oil & gas segments. Besides, strategic and financial investors continue to evaluate and explore opportunities in both greenfield and brownfield sectors,” said Akash Gupta, executive director (regulatory services), PricewaterhouseCoopers. He, however, added the momentum might not continue, as currently, the global economic environment remained subdued and uncertain, and capital was scarce.
“Due to limited availability of long-term capital, interest rates have peaked and inflation remains at an all-time high. Under such circumstances, attracting foreign investment for any country remains a challenge. Investors would not want to commit large capital investments. They would, instead, tend to park these in asset classes with low-risk sectors,” Gupta said.
N R Bhanumurthy, economist, National Institute of Public Finance and Policy, said, “It is true FDI inflows have seen a tremendous rise in the last financial year. This is one indicator that still supports the argument that the macro fundamentals in India are strong, despite a so-called ‘policy paralysis’. In other words, India’s long-term outlook is strong, though in the short term, there is some erosion of confidence, which is visible in the outflow of short-term foreign capital. The first half of 2011-12 was much better compared to the second, when all the negative factors had smoothened FDI inflows to some extent.”
He added 2011-12 had started on a positive note, with many agencies forecasting a growth of about nine per cent. The Union Budget had also proposed to achieve a better fiscal deficit than that targeted by the 13th Finance Commission.
“Going forward, India may not attract as much FDI as that in FY12 because of the worsening crisis in the euro zone, the subdued investor sentiment and the decision to relook at Mauritius as the biggest source of FDI. Besides, recent decisions on tax laws in the Budget would hamper investor sentiment in the short term,” he said.
Experts said this year, the government would focus on attracting foreign institutional investors to arrest the depreciation of the rupee against the dollar, due to which FDI equity inflows might not get the necessary push, unless large-scale reforms in multi-brand retail and aviation take place.
Rajiv Kumar of the Federation of Indian Chambers of Commerce and Industry said while standalone FDI inflows were increasing, capital inflows were not as robust. He also pointed to the decline in the share of foreign direct investment, as a proportion of gross fixed capital formation (GFCF). The ratio of FDI to GFCF stood at about three per cent in 2003-04, which rose to 10 per cent in 2008-09. It stood at about 5.9 per cent in 2010-11. However, in 2011-12, the ratio rose to 12.43 per cent.
According to Ved Jain, chairman of the Associated Chambers of Commerce and Industry’s national council on direct taxes, about 56 per cent of foreign investment into India comes from Mauritius, Singapore and Cyprus. This could be severely hit, he said.
. PKR stands for Pakistani Rupees and the graph you have posted is for Pakistani rupees.
