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

Address by Mr. A Vellayan, Chairman, India - Japan Business Cooperation Committee

Hon'ble Shri Kamal Nath, Hon'ble Minister of Commerce & Industry
Mr. Ashok Jha, Secretary, DIPP, Ministry of Commerce & Industry
Mr. Onkar S Kanwar, Sr. Vice President, FICCI
H.E. Mr. Yasukuni Enoki, Japanese Ambassador to India
Mr. Nobuo Ohashi, Chairman, JIBCC,
Mrs. Geetanjali Kirloskar, Co-Chairperson, IJBCC
Distinguished delegates & Friends,

As Chairman of the Indian side of the India-Japan Business Cooperation Committees, may I also join President FICCI in extending warm welcome to the delegation from Japan. I deem it an honour to extend a hearty welcome to Hon'ble Minister, whose address will guide us in our efforts to take our bilateral relationship from strength-to strength.

Japan and India have had a long history of trade and, more importantly, share a unique cultural bond dating back to links of Buddhism. However, the time has come to re-kindle these historic relations into living realities through a quantum jump in partnerships in all spheres of economic activity.

Japan has begun to view India as an economy with immense investment and manufacturing potential. This is reflected by the fact that India is now the top recipient of Japanese loan assistance, having grown at 12.37% over last year to peak at over 125 billion Yen (nearly US$1.25 billion), Japan's ODA for India, undoubtedly an important pillar of the close relationship between the two countries, has increasingly focused on the development of economic infrastructure, alleviation of poverty and environmental conservation - all three issues of prime concern to our country in our quest for globalization.

Indeed, just as Japan needs India, India also needs Japan, if not more. Several windows of opportunity exist and results will follow. In my view, we need to focus on the following areas very seriously:

1. Exchange of delegations: Regular exchange of delegations is essential for establishing direct linkages with counterpart organizations and business houses.

   Today's meeting will be followed by IndiaChem 2004, FICCI & GOI's biennial Chemicals, Petrochemicals & Pharmaceuticals Exposition from November 3-5, 2003 at Mumbai with Japan as Partner Country.
   
   FICCI along with Department of Industrial Policy & Promotion has proposed the Destination India event in February 2005 to increase awareness about India as an investment destination.

2. Flow of FDI to India: Japan is the 4th largest investor in India with cumulative approvals since 1991 valued at US$ 3.21 billion. It has been observed that Japanese investment in India has been stagnant over the last few years, concentrating mainly in sectors like transportation, telecommunications, fuels, chemicals and electrical equipment. We urge you to not only intensify your operations in these areas but also look at new avenues for investment.

3. Diversification of trade basket: Our bilateral trade in 2003-04 amounted to US $ 4.3 billion, an increase of 17% over last year. Although our imports from Japan have risen substantially by over 43% (from US$ 1.8 billion to US$ 2.6 billion), Indian exports to your country have remained stagnant. I urge both sides to explore ways of strengthening out trade networks in the years to come.

4. Knowledge-based industries: It is common knowledge that Japan is the world leader in information technology. You are the second largest software market after the US, the largest telecommunications market in Asia and perhaps also the world's largest and most innovative producers of consumer and industrial electronics goods.

Every day, we are conquering new frontiers of knowledge which has lead to faster growth and new opportunities.

Time is opportune for us to combine our strengths to achieve win-win partnerships and achieve a higher orbit of growth. We could be your long-term partner in the areas of software engineering, embedded software, customer application development & maintenance, product development and design and R&D services besides the often-mentioned area of IT enabled services.

Over the last fifteen years I have been a regular visitor to Japan and cannot help feeling that both India and Japan have not exploited even a fraction of the potential areas for partnership. Very clearly, India has been identified as the market for the future in the BRIC Report and Japan has the technology and manufacturing base to take advantage and support the growth in this region. My concern is although there is trade and investment, it is not there to the extent that it should be. Is it because Japan is concentrating more on China? Is it because India finds it difficult to penetrate the Japanese market, or is it because there are clear differences in the way and pace of business between the two countries, I would like to leave the following thoughts with both the Japanese and Indian delegations

1. With competitive pressures worldwide, why isn't the Japanese manufacturing sector linking closely with the Indian manufacturing sector to address both domestic and world markets.
2. Given the fact both the Rupee and Yen are Dollar linked and that there is a huge arbitrage situation between the Yen interest rates and Rupee interest rates, why isn't the Japanese financial sector more active in India.
3. When the whole world is outsourcing from India, why are not Japanese companies looking at BPO activity out of India more aggressively.
4. Isn't there opportunity for India to work with Japan in ASEAN markets.
5. Isn't there opportunity for Japanese companies to work with Indian companies for the African market
6. Forging of links in the bio-tech area clearly need to be looked at.

Friends, the opportunities appear to be immense. The need for both of us is to get more aggressive and leverage the relationships that we have had and convert them into a much larger two-way trade. Let us not waste further time. Let this meeting be the start of a time bound plan to increase our bilateral trade by quantum jumps.

We are thankful to Shri Kamal Nath, Hon'ble Minister for Commerce & Industry, Govt of India for giving Indian industry the opportunity to interact with such visionary leaders who have been instrumental in making the 21st century truly the Asian century. I hope that your visit, would further catalyze our already strong bonds and help us reach new horizons for diversifying and cementing our partnership.

Thank You.