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 t...
Indo Japan chamber signs MoU with Yokohama India centre
For mutual cooperation in promoting business between Kerala and Ja...
for INR 1,366 crore in 2010. In addition, since 2011, Reliance Capital is in partnership with Nippon
Life Insurance by hol...
The Japanese auto maker seems to have big plans for India. The launch of Honda Amaze and new
City has boosted volumes sign...
factory) and exports to other countries. India is the export hub for Panasonic electric cookers and
mixers. Panasonic has ...
to see if it can introduce the tablets in India as well. The company is also looking at magnifying
its retail presence in ...
of New Era (95%). The residual 40% will be acquired by the company in 2016 to make it a wholly
owned subsidiary.
The buy w...
Gujarat International Financial Tec city - GIFT
Right investment is all about spotting the right opportunity. Locations wh...
Target Business Segments:
 Financial Services Operations (Back-office of banking, Insurance and Asset Management
Companie...
4. Reinsurance and related operations.
Corporate Treasury Management
1. Managing Foreign Exchange Transactions;
2. Hedging...
7. No Stamp duty on Mortgages;
8. No Electricity duty.
At the profit Stage, exemption will be given from payment of Income...
CONTACT US
PANKAJ SINGLA
Japan Desk, Corporate Professionals
NEW DELHI
D-28, South Extension Part - I, New Delhi
– 110049
...
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Indo Japan Trade and Investment Bulletin June 2014

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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

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Indo Japan Trade and Investment Bulletin June 2014

  1. 1. 2014 Indo-Japan Trade & Investment Bulletin June Issue Japan Desk, Corporate Professionals
  2. 2. 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
  3. 3. 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
  4. 4. 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.
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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.
  9. 9. 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
  10. 10. 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;
  11. 11. 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;
  12. 12. 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.
  13. 13. 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 MUMBAI Mastermind- I, Royal Palms Estate, Aarey Colony, Goregaon (East), Mumbai -400065 Tel: +91 9820079664 Fax: +91 9810037390 BEDFORD (UNITED KINGDOM) 2-4 Mill Street, Bedford MK40 3HD U.K. Tel: +44 (0) 2030063240 Fax: +44 (0) 2030063241

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