2014

Indo-Japan Trade & Investment

Bulletin June Issue

Japan Desk, Corporate Professionals

Indo-Japan Trade & Investment Highlights

Indo Japan chamber signs MoU with Yokohama India centre

Sumitomo Mitsui Set to Invest 2,400 Crore in Reliance Capital, India

Japan's UNIQLO looks to enter business in India

Rakuten opens Development & Operations center in India

Honda has big plans for India

Japanese Industrial cluster starts taking shape in Gujarat, India

Panasonic to promote Automatic Rice Cookers in India

Yamaha turns to fuel efficiency to enhance its position in India

Toshiba aims to be among top 3 in PC market in India

Indian PM to visit Japan next month

India’s Murugappa to finalise JV plans with Japanese companies

En-japan Launches Business in India

FTA with India were highly utilized, JETRO survey

Knowledge Centre

Gujarat International Financial Tec-City

INDEX

Indo Japan chamber signs MoU with Yokohama India centre

For mutual cooperation in promoting business between Kerala and Japan, the Indo Japan Chamber

of Commerce Kerala (INJACK) signed an MoU with Yokohama India Centre (YIC). The signing

ceremony was held during a video conference between the two organisations at Nippon Kerala

Centre. Yokohama has similar MOUs with Indian Merchants Chamber (IMC) and Federation of

Indian Chambers of Commerce & Industry (FICCI) and INJACK is only the third organisation in

India with which Yokohama has such MOU. Yokohama has a long history of doing business with

India and the presence of Indian business in Yokohama has increased manifold as now several big

Indian IT companies, including Infosys and TCS, have branches in Yokohama and TVS among

others have manufacturing units there.

The focus of INJACK is on developing business in the SME sector and it has already identified 50

SMEs in Yokohama and nearby region for business matching with SMEs in Kerala. Partnerships

between women entrepreneurs of Kerala and Japan in the SME sector were also proposed. A

delegation of Japanese business persons is likely to visit Kerala early next year.

Japan's Sumitomo Mitsui Set to Invest 2,400 Crore in Reliance Capital, India

Japan's Sumitomo Mitsui is all set to buy a 10 percent stake in India’s Reliance Capital owned by

Anil Ambani. The proposed deal is worth $400 million (about INR 2,400 crore) and is expected

to be signed by September this year. If the deal is finalized, it will be the second largest investment

by a Japanese company in the Reliance group and the fourth largest in the Indian financial services

sector. Sumitomo Mitsui has invested in retail, banking, commercial, financial and fiduciary

business services. India, being a developing market has seen significant investment from Japanese

companies, which are keenly investing in India with a view to reap good returns for Japanese

banks. In recent past, Japanese firms have made huge investments in India, not to mention

Sumitomo Mitsui Banking Corporation (SMBC) bought 4.5 percent stake in Kotak Mahindra Bank

Indo-Japan Trade & Investment Highlights

for INR 1,366 crore in 2010. In addition, since 2011, Reliance Capital is in partnership with Nippon

Life Insurance by holding 26 percent stake for INR 3,062 crore. It is indubitable that investment

by Japanese financial services firm enhances the credibility of Indian companies.

Japan's UNIQLO looks to enter business in India

Japanese clothing chain UNIQLO is looking to source garments from India and may soon open its

stores in the country. UNIQLO chairman Tadashi Yanai called on Prime Minister Narendra Modi

recently and expressed the intent of his company to explore business opportunities for sourcing

garments from India. The Indian prime minister appreciated and welcomed UNIQLO's interest in

developing business in India and also highlighted the benefits that the Indian garment sector offers,

including availability of cotton, skilled manpower, robust infrastructure, a big domestic market

and good ports for exports.

Currently, India permits 100 percent FDI in single brand retail and up to 51 percent in multi-brand

segment.

Japan’s Rakuten opens Development & Operations center in India

Rakuten, the Japanese membership-based internet services company, recently announced that it is

opening its new Global Development and Operations Center in Bangalore, India, namely,

the Rakuten India Development and Operations Center (RIDOC), in collaboration with PROLIM

Global Corporation, which is an IT consulting services company. The Indian operations are

launched with a Build-Operate-Transfer framework and the company is hopeful that it will be

helpful in retaining personnel, in enhancing the knowledge-base and to provide more opportunities

to support other Rakuten Group companies and projects around the world.

According to a recent report, Rakuten is also eyeing acquisitions in India. Further, the company

had also launched its eBook reader Kobo in India last year in partnership with Crossword

bookstores, WHSmith and Croma chain of electronic stores.

Honda has big plans for India

Japanese automaker Honda Motor Co has launched two new models during the year in the Indian

market, Mobilio and Jazz. The launch of Mobilio is scheduled for next month and Jazz later in the

year. The prices of the two models will be decided post declaration of budget by the Union.

The Japanese auto maker seems to have big plans for India. The launch of Honda Amaze and new

City has boosted volumes significantly and the company is still celebrating that success. The

Japanese company expects to double its overall volumes within two years, which in return, might

require the company to expand its Indian manufacturing capacity. At present, the company has

two manufacturing units at Greater Noida in Uttar Pradesh, and in Rajasthan. Jnaneswar Sen, the

senior Vice-President of Honda Cars India Ltd talked about the company’s registered growth of

83 per cent last year. The company expects this number to go up further as it will be launching

more models in India. Honda eyes a bigger share in the India market.

Japanese Industrial cluster starts taking shape in Gujarat, India

The Gujarat government has initiated the process of developing a Japanese industrial cluster near

the Maruti Suzuki India Ltd (MSIL) factory at Hansalpur, Gujarat, India. The area has already

managed to attract projects from major Japanese companies like Honda Motorcycle and Scooter

India (HMSI), Mitsubishi Aluminium company, and around four medium sized engineering

companies from Japan, apart from the MSIL plant. A senior state government official, closely

associated with the development, revealed that last week, a subsidiary of Mitsubishi Aluminium

Co held a ground-breaking ceremony in the Vithalpur region, which is set to be developed as

Japanese industrial cluster, which primarily aims at attracting investments from the Japanese

companies. Besides Mitsubishi, four medium sized engineering companies have also expressed

interest to set up their projects in the area. The Japan External Trade Organisation (JETRO) is

playing a crucial role in attracting investment into the cluster. During the last Vibrant Gujarat

Global Investors’ Summit, a Japanese delegation of over 150 companies had visited Gujarat. Out

of the 150 companies, several medium sized companies in the electronics and engineering sector

had shown interest in Gujarat.

Panasonic to promote Automatic Rice Cookers in India

India’s Maidoindia (Maido Enterprises Pvt. Ltd.) has signed an agreement with Japanese home

appliance manufacturer Panasonic Appliances India Pvt. Ltd. to distribute Automatic Rice Cookers

to the HORECA (Hotels, Restaurants, Catering companies) segment in India. The Automatic Rice

Cookers are made in the state of the art Panasonic factory in Chennai, having capacity to make

one million electric cookers. Panasonic makes the electric cookers in the Indian plant (Chennai

factory) and exports to other countries. India is the export hub for Panasonic electric cookers and

mixers. Panasonic has been selling the home use cookers since 1990 and through this partnership,

the company desires to sell 10,000 pieces every year to the HORECA segment. Hakuei Kosato,

the Managing Director of Maidoindia said in a recent statement that the company’s primary

business remains Japanese food but the company is very keen on bringing products from Japan

that are high quality, high utility and value for money.

Yamaha turns to fuel efficiency to enhance its position in India

Yamaha, Japan’s leading two-wheeler manufacturer is turning to fuel efficient technologies for the

Indian market as it plans to acquire a bigger share in the India’s two-wheeler segment. The

company plans to introduce fuel efficient technologies in its upcoming launches as well as

upgrades of its existing models in India. It shifts its focus from 'performance' to 'performance with

mileage' as the company recognizes that fuel economy is a key factor that influences the buying

behavior of the Indian customer. Therefore, the company is investing its resources in innovations

in fuel economy technologies. The company officials said that company will be launching new

models of two-wheelers with more fuel efficient technology in Indian market which provide best

in class mileage as well as cleaner air. In order to keep up with its growth plans, Yamaha is setting

up a Rs 1,500-crore plant in Chennai, India where it plans to start manufacturing from next year.

Toshiba aims to be among top 3 in PC market in India

Proposing to be among the top 3 tech players in India, Japanese major Toshiba, revealed a range

of devices, entering into newer segments like 2-in-1s (tablet-cum-notebooks) and workstations,

and launched the world's first ultra HD 4K laptop in India. The company feels that the Indian

market itself has a lot of potential and it is still an under-penetrated market. These new innovations

will help the company to expand its presence and market share to almost double. Toshiba aims to

be among the top three players by March 2015 said the company’s country head. Currently, the

company has market share of 6-7 percent.

The detachable 2-in-1 laptop - Portege Z10t-A and Satellite L30W allow users to use the device

as a notebook as well as a tablet by detaching the keyboard. The Satellite L30W will be available

from next month. The company has launched tablets in the international markets and is exploring

to see if it can introduce the tablets in India as well. The company is also looking at magnifying

its retail presence in India this year by adding 25 new stores through the franchise route.

Indian PM to visit Japan next month

The Prime Minister of India, Mr. Narendra Modi will be visiting Japan, which is a key strategic

partner of India, next month. The Spokesperson in the External Affairs Ministry said that there

was a request by Japanese government for an early visit of Mr. Narendra Modi to their country

and he added that the month of Modi's visit to Japan was most likely to be July. During his visit to

Japan, the Indian Prime Minister is set to hold talks with his Japanese counterpart Shinzo Abe

among other issues, on key bilateral and regional issues in the backdrop of China's growing

assertiveness in the Asia-Pacific region. Modi has been enjoying a close equation with Japan as

Gujarat Chief Minister with many Japanese companies making huge investments in the state.

During his visit to the country in 2007, he galvanised Japanese investment into Gujarat.

India’s Murugappa to finalise JV plans with Japanese companies

Fertilizer major Coromandel International, part of Murugappa group, would soon be finalising the

outlay needed for its joint venture with two Japanese companies to make farm equipment. Officials

from the Japanese companies will be coming to India soon to finalise the investment details.

Coromandel International has entered into a joint venture alliance with Japanese companies

Yanmar & Co and Mitsui & Co to make and sell small farm equipment used in paddy cultivation.

Under the proposed joint venture, Murugappa group and Yanmar would hold 40 percent each,

while 20 percent will be held by Mitsui. With the new government at the centre, the group expects

a better quality on the policies for various sectors and based on that, the group would formulate its

next growth plans.

En-Japan Launches Business in India

En-Japan Inc., Japanese recruitment solutions provider has acquired 60% stake in an Indian job

placement firm, New Era India Consultancy Pvt. Ltd, for INR 345 Million. By virtue of holding

more than 50% stake, the Indian firm became a subsidiary of the Japanese solution provider. As

per the agreement, En Japan and En Asia holdings Ltd., a consolidated subsidiary, will acquire

60.0% of the total issued shares of New Era from Founder Arvind Sehgal, the largest shareholder

of New Era (95%). The residual 40% will be acquired by the company in 2016 to make it a wholly

owned subsidiary.

The buy would facilitate En-Japan to reach to New Era’s clients based in New Delhi, India. New

Era is a recruiting company targeting high-class professionals in India with core focus on

introducing IT professionals. In addition to its head office in New Delhi, New Era has offices in

major cities in India. En-Japan engages itself in offering Recruitment service and post-employment

support, Internet- based job information service, job placement, H&R consulting in Japan and

various other countries.

The number of Japanese companies launching business in India has doubled over the last five

years.

FTA with India were highly utilized, JETRO survey

The Japan’s External Trade Organization (JETRO) has conducted a survey for financial year 2013

on the international operations of Japanese Firms, according to which, the Free Trade Agreement

(FTA) utilization rate of Japan, including exports and imports in Japan, has shown a continuance

of the annual increase. In particular, FTAs in collaboration with India as a signatory country were

highly utilized.

Gujarat International Financial Tec city - GIFT

Right investment is all about spotting the right opportunity. Locations where big infrastructure and

industrial projects come up see rapid growth and ensure good returns.

As a dream project of Prime Minister Narendra Modi, Gujarat International Financial Tec City

(GIFT) is designed for Greenfield development as a hub for the global financial services sector.

The GIFT master plan facilitates Multi Services Special Economic Zone (SEZ) with International

Financial Services Centre (IFSC) status, Domestic Finance Centre and associated Social

infrastructure. GIFT SEZ Limited has been formed for development of Multi Services SEZ at

Gandhinagar with the prime focus on development of IFSC and allied activities in SEZ. It is

pertinent to note that the primary focus of the Multi Services SEZ will be on financial services.

Purpose of GIFT SEZ:

The main purpose of GIFT SEZ is to provide high quality physical infrastructure i.e. electricity,

water, gas, district cooling, roads, telecoms and broadband, in order to motivate finance and tech

firms to relocate their operations at GIFT from places where infrastructure is either inadequate or

very expensive.

To develop and implement the project, Government of Gujarat (GOG) through its undertaking

Gujarat Urban Development Company Limited (GUDCOL) and Infrastructure Leasing &

Financial Services (IL&FS) have established a Joint Venture Company, "Gujarat International

Finance Tec-City Company Limited" (GIFTCL). The estimated cost of the entire project is Rs.

70000 crores (USD 11 Billion).

GIFT is being designed as a hub for the global finance services industry for which connectivity,

infrastructure and transportation access have been integrated into the design of the city and an

attractive pricing strategy is also being developed to ensure that it is a fraction of the cost that is

ordinarily incurred in other Indian and global finance cities.

Stage of completion:

Formal approval for multi service SEZ has been received from Ministry of Commerce,

Government of India. Major approvals viz. environmental clearance for the project and height

clearance for part of Phase-1 has been received. Also, construction activities at site viz. levelling

and dressing have been initiated and Phase-1 is expected to commence in the later part of this year

and would be completed within 3 to 5 years. At present, two 29-floor commercial towers have

been completed.

Knowledge Center

Target Business Segments:

Financial Services Operations (Back-office of banking, Insurance and Asset Management

Companies);

IT services (Software Application development and maintenance);

Capital Markets & Trading;

ITeS;

BPO Services; and

KPO Services.

Land use in GIFT SEZ:

The predominant land use in GIFT SEZ is development of commercial, residential and social

facilities. Commercial development is the primary focus of GIFT SEZ with major built up space

dedicated to offices for financial and related services, retail shopping, general business and

commerce, district centre, community centre, local shopping, hotels etc. Appropriate emphasis is

also given towards essential housing facilities, which are provided in the form of studios and

apartments for employees working in GIFT SEZ. Further, social facility category includes all

educational institutes, health centre, communication hubs and distribution facilities.

Business Opportunities:

Offshore Banking

1. Foreign Currency lending;

2. Taking of deposits;

3. Issue of securities;

4. Over the Counter (OTC) Trading in Derivatives for Risk Management and speculative

purposes;

5. Venture capital.

Fund Custody, Administration and Custody

1. Custody of Corporate Funds;

2. Trust Companies;

3. Asset Management companies;

4. Hedge funds;

5. Investment Counsellors and Portfolio Managers.

Insurance, Assurance and Reinsurance

1. Life and Non-Life Insurance business;

2. Assurance Companies;

3. Captive Insurance;

4. Reinsurance and related operations.

Corporate Treasury Management

1. Managing Foreign Exchange Transactions;

2. Hedging Operations;

3. Raising and Investing of Cost.

Securities Trading

1. Regional financial exchange;

2. Securities Trading;

3. Futures and Options Trading;

4. Commodities Trading.

Others

1. International Business Companies;

2. Back office operations;

3. Ship Management & Maritime Operations;

4. Export Finance Companies;

5. Companies involved in Lending activities, Trade finance activities, International Leasing,

Foreign Exchange dealers, International factoring;

6. Representative offices;

7. Money Changers and brokers

Fiscal Incentives:

GIFT City offers a number of fiscal incentives to the potential investors by providing exemption

from income tax, service tax, excise duty, custom duty, sales tax, electricity duty etc. depending

upon the nature of investment or unit established.

For Development Stage (Capital Goods, Consumables, Components & Spares) and Operation

Stage (Raw Materials, Consumables, Components & Spares), the following fiscal incentives are

offered to the potential investors:

1. No Customs Duty;

2. No Excise Duty;

3. No Sales tax;

4. No Service Tax;

5. No Purchase Tax;

6. No Stamp duty & Registration Fee;

7. No Stamp duty on Mortgages;

8. No Electricity duty.

At the profit Stage, exemption will be given from payment of Income Tax in the following manner:

100% for the first 5 years

50% for the next 5 years

50% of profits ploughed back for the next 5 years

City officials in GIFT are inviting companies from countries like Singapore who are willing to

expand their business operations but are unable to do so due to a lack of land in their home

countries; such companies may consider opening their businesses in GIFT where real estate is

relatively cheaper. Among the investments being encouraged include investments from banks,

private equity companies, insurance companies and asset management companies.

China's technology giant Huawei is likely to provide technology to GIFT. According to Eric Yu,

president, enterprise business, Huawei India, this technology includes networking solutions and

setting up of data centres and surveillance as well as other opportunities.

Leading developers showing an interest in participating in development of GIFT City includes

Ajmera Realty, Hiranandani, Arihant Developers, Lodha, Godrej among others.

GIFT is well on course to become the first Indian smart city a project that is ambitious but the

successful completion of which is likely to spark proliferation of several other similar smart city

projects in the country. For instance, as part of the plan, Delhi-Mumbai Industrial Corridor

proposes to develop seven new smart cities. It is only natural that the companies investing in GIFT

will have a natural advantage in the similar future smart city projects that are likely to come up in

different parts of India.

DISCLAIMER:

The document has been prepared and produced only for the information purpose only and is not to be construed as an advertisement, solicitation,

invitation, personal communication or inducement of any kind by the Firm, the author or any of its Partner or associates. The entire content of this

document has been developed on the basis of relevant statutory provisions and as per the information available at the time of the preparation.

Though the author has made utmost efforts to provide authentic information, however, the material contained in this document does not

constitute/substitute professional advice that may be required before acting on any matter. The author and the firm expressly disclaim all and any

liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be

done by any such person in reliance upon the contents of this document.

CONTACT US

PANKAJ SINGLA

Japan Desk, Corporate Professionals

NEW DELHI

D-28, South Extension Part - I, New Delhi

– 110049

Tel: +91-11-40622200

Dir: +91-11-40622293

Fax: +91-11-40622201

Mob:+91-99715-08320

Email: pankaj@indiacp.com

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Fax: +91 9810037390

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Tel: +44 (0) 2030063240

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