32rd Joint Meeting of India-Japan Business Cooperation Committees
November 1, 2004 New Delhi

Distinguished delegates, Ladies & Gentlemen

It is indeed a great pleasure to address this august gathering on the occasion of the 32^nd Joint Meeting of the India-Japan Business Cooperation Committees. At the outset, I would like to thank the participants from Japan for traveling to India to participate in this event. I also thank both FICCI as well as the Japan Chamber of Commerce & Industry for organizing the event and giving an opportunity to our Japanese friends to share with us their perceptions about India-Japan economic co-operation and development. The joint organization of this Joint Meeting is, perhaps, indicative of the joint endeavours we hope to undertake!

Japan-India friendship has a long history, free from disputes and disagreements. Our age-old spiritual affinities and cultural links provide a resilient foundation for a multifaceted relationship of cordiality and cooperation. Indians have always admired the Japanese people for their gentle nature, their rich culture, their elegant sense of taste and beauty and their determination to succeed even in adverse circumstances. Our desire for close relations with your country is based on broad national consensus and is above domestic politics. The new Government under Dr. Manmohan Singh has reaffirmed its intention to pursue a closer strategic and economic engagement with Japan.

Close cooperation between our two countries is a pre-requisite for making the 21^st century truly the century of Asia. It is for this reason that India & Japan have jointly staked their legitimate claim, along with Germany and Brazil, for permanent seats in the UN Security Council. But this political quest must be underpinned by economic content. We can together impart momentum to the trend towards the emergence of a multi-polar, democratic, equitable world order that will ensure peace, prosperity and equilibrium on our planet in the long run. It is in this broad context of optimism and anticipation that we call upon our friends in Japan, in particular the captains of Japanese trade and industry, to join us in exploring and exploiting the many opportunities that the future holds for our two nations.

India-Japan trade amounted to about 4 billion dollars last year. This showed a growth of 18% over the previous year. While the overall growth was good, this came after a three-year stagnancy. There is also a marked negative balance of trade in Japan's favour. From India's point of view, a negative balance is not in itself a worrisome thing - it is indicative of the special needs of a fast growing and rapidly expanding economy. Still, we feel that so far the full potential of our economic relationship is far from being realized, and a boost required. The Government of India is aware of the strong will of the Government of Japan for expanding trade and economic relations with India and correcting the trade imbalance by pushing up trade and investment.

As regards Japanese investment in India, cumulative investment approved for Japan since 1991 has been of the order of 3.2 billion dollars, which is around 5% of the total approvals for all countries. However, actual inflow from Japan was only 1.8 billion dollars. Despite a high number of collaborations, the average investment is still low, indicating a considerable degree of caution. A large number of big names of Japan have become household names in India -Nippon, Mitsubishi, Mitsui, Fujitsu, ltoh, Marubeni, are only some of them. Yet there seems to be some hesitancy. We invite the captains of Japanese trade and industry to have a fresh look at where India stands today and take a long-term view of trade and investment opportunities that are on offer.

Our vibrant democracy is India's biggest asset. It has provided a resilient base for steady economic growth with stability. It also makes India a reliable partner for long term economic collaboration. In all major policy pronouncements since taking office, the new Government has reaffirmed its commitment to economic reforms that stimulate growth, investment and employment. We have set ourselves the objective of seeking 7 to 8 per cent growth annually in a sustained manner, ensuring that the fruits of growth are shared equitably and inclusively by all sections of society. Our comfortable foreign exchange reserves of 120 billion dollars, and our booming stock market despite poor monsoons, indicate that we are on the correct path.

In a vast developing society administered by a democratic dispensation, it has to be ensured that economic liberalization does not undermine equitable development and does not erode broad political support for the reforms process itself. This is precisely what our Government is trying to do. With Dr. Manmohan Singh as Prime Minister and a host of known protagonists of reform back in office, the management of the Indian economy and the future of the reforms process are in safe hands. Our partners and potential investors should have no cause for any misgivings in this regard.

Recently I unveiled a new Foreign Trade Policy, which has as its twin goals the doubling of India's percentage share in world trade within five years and the creation of greater employment opportunities for our people. We are committed to reducing transaction costs and unshackling business from the clutches of irrelevant rules and procedures. We are taking up various measures for trade facilitation and elimination of congestion in ports. Our whole effort is to push up exports by a quantum jump. Last year India's exports were 63 billion dollars. This year, we hope to cross 75 billion dollars.

We are particularly eager to get investment in infrastructure. Before the end of this year, I shall be introducing a bill in Parliament on Special Economic Zones. These will include Bio-Technology Parks and Free Trade & Warehousing Zones. In all these, FDI up to 100% would be permitted, including in the real-estate development and establishment of the zones. We see Special Economic Zones as hubs of manufacturing, and Free Trade & Warehousing Zones as trading hubs. These zones will be specially designated areas, for all economic purposes foreign territory and therefore units located in them will enjoy a number of tax preferences. These and the state-of-the-art infrastructure, should make them particularly attractive places to set up business in.

The opportunities for cooperation between India and Japan are vast and both sides are capable. We need only to harness the healthy trend of growth by way of continuous interaction through exchange of delegations, enhancing participation in each other's trade fairs and seminars and encouraging our trade through positive initiatives. India and Japan are among the two largest democracies in the Asian region and needed to have a greater and deeper partnership. I hope that in the coming years the upward swing in our bilateral trade will become stronger and stronger and this meeting will serve us a significant step in this direction setting the tone to accelerate the flow of investments to India and expand economic activity between the two countries.

Thank you.