Indo-Japan Trade Investment Bulletin


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A monthly Trade and Investment Bulletin of Corporate Professionals for Indo- Japan Business Community.

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Indo-Japan Trade Investment Bulletin

  1. 1. Indo-Japan Trade & InvestmentBulletinNovember IssueJapan Desk, Corporate Professionals 2012
  2. 2. INDEXIndo-Japan Trade & Investment Highlights  Third Round of India-Japan-US Trilateral Dialogue Held in New Delhi  India-Japan Sign the Social-Security Agreement  Fukuoka-ken Governor Invites Indian Investment as Sister Cities Delhi and Fukuoka celebrate Fifth Anniversary of Friendship Agreement  India-Japan Finalise the List of Prospective Projects for Japan’s $4.5 billion Facility for the Delhi-Mumbai Industrial Corridor (DMIC) Project  India and Japan Join Hands to End China’s Rare-Earth Monopoly  INPEX Corporation of Japan Picks up 26% Stake in KG Block  Suzuki to Make India Its Global Sourcing Hub for Small Cars  Sony Increases Sourcing of Optical Drives from India  Omron Healthcare Targets Three-Fold Growth by 2015  Tata AutoComp Sells Stake in Tata Yazaki AutoComp to JV Partner Yazaki Corp  Modi Rubbers and Asahi Organic Chemicals form JV to Exploit Resin Coated Sand (RCS) Market in IndiaKnowledge Center  The Security Industry in India
  3. 3. Indo-Japan Trade & Investment HighlightsThird Round of India-Japan-US Trilateral Dialogue Held in New DelhiThe third trilateral meeting among the senior officials of India, Japan and the US was held inNew Delhi, where the three countries explored possibilities of working together in the region.The trilateral has irked China as the senior Japanese officials have said to brief India and US onthe Senkaku/Diaoyu islands. China has blamed Japan for being anxious of economic rise ofChina.The trilateral has been aiming at working to promote economic and trade ties in south-east Asia.The trilateral is also important as India pushes for the east-west corridor to connect India withThailand via Myanmar and further all the way to Vietnam.India-Japan Sign the Social-Security AgreementSigning of the much awaited social-security agreement on 16th November,2012 between India and Japan comes as a big relief for the expatriatesemployees. The social security agreement signed by Foreign MinisterKoichiro Genba and Indian Ambassador to Japan Deepa Gopalan Wadhwawill reduce the dual pension burden on companies and employees. TheJapanese and Indian expatriate employees in the two countries will nolonger be required to pay pension premiums in both the countries. The employees temporarilydispatched for a period of not more than five years to the other country will only be responsibleto pay premium towards the pension system of the country from which employees aredispatched. Fukuoka-ken Governor Invites Indian Investment as Sister Cities Delhi and Fukuoka celebrate Fifth Anniversary of Friendship Agreement Fukuoka Prefecture and Delhi have signed agreement to promote co-operation in the housing, traffic management and improvement in the urban environment on the occasion of celebration of Fifth anniversary of friendship agreement
  4. 4. between the two sister cities. Fukuoka Prefecture’s Governor Hiroshi Ogawa headed the businessdelegation of 50 members to India and sought to promote economic, business and cultural tiesbetween both the cities and invited Indian companies to invest in Fukuoka.India-Japan Finalise the List of Prospective Projects for Japan’s $4.5 billion Facility for theDelhi-Mumbai Industrial Corridor (DMIC) ProjectThe Ministry of Economy, Trade and Industry (METI) and the Ministry of Commerce andIndustry of India have agreed on the list of prospective projects to be financed by $4.5 billionfrom Japan for the $9 billion DMIC project. DMIC is an India-Japan joint development project that is aimed at building a dedicated freight railway line to connect Delhi with Mumbai. The project is not only limited to the dedicated freight railway line and also includes development of other infrastructure along the line including industrial areas, power plants and infrastructure, distribution facilities, housing and commercial infrastructure.India and Japan Join Hands to End China’s Rare-Earth MonopolyIndia and Japan entered into a Memorandum of Understanding (MoU) 16th November, 2012 topromote joint-production of rare-earth minerals. Japan plans to start importing approximately4100 tons of rare earth minerals annually from India to end its reliance on China for the supplyof rare-earth minerals.Indian government is also exploring the possibilities of partnering with Japan for jointproduction of rare-earths in third countries like Kazakhstan to maximise political, diplomatic,and economic dividends for both India and Japan.INPEX Corporation of Japan Picks up 26% Stake in KG BlockJapanese oil and gas exploration giant, Inpex Corporation has agreed to acquire a 26 per centstake in the KG Block, an offshore Indian exploration block, from ONGC.The deal is subject to approval of the Indian government. Upon the approval of the IndianGovernment, the stake of State owned Indian oil and natural gas exploration leader ONGC willbe reduced to 34 per cent and will continue to serve as the operator of the block.
  5. 5. Suzuki to Make India Its Global Sourcing Hub for Small Cars Suzuki Motor Corporation plans to utilize the expertise of its Indian subsidiary Maruti Suzuki to make India its small car export hub. The completion of Maruti Suzuki’s Gujarat plant will kick-off the gradual shift to making India export hub for entire range of small cars as the exports from Japan have become uncompetitive because of the appreciation of Yen. Suzuki is also looking to exploit the benefits of lower wage rates in the country that has become its second home. Apart from the factors like appreciating Yen and higher wages, the move is also likely to reduce theeffects on supply and prices caused by factors such as natural disasters.Sony Increases Sourcing of Optical Drives from IndiaSony is banking heavily on Indian optical drive manufacturers as it sources approximately 60%of its global requirement from India. The Fukushima disaster and floods in Thailand severely hitSony’s traditional sources of supply and the company shifted its focus to India to diversify itssupplier base. In August, Sony had announced the plans to exit the business of manufacturingoptical drives, which could mean rise in company’s dependence on India.Omron Healthcare Targets Three-Fold Growth by 2015Indian healthcare arm of Japanese conglomerate Omron Corporation, Omron Healthcare Indialooks all set to achieve three-fold growth as it targets a $43 million in sales by the year 2015. Thecompany aims to achieve the desired figures by increasing the number of retail outlets in thecountry and by beefing up its product line with new launches.The healthcare industry in India is said to be growing at the rate of 20% a year, well set to reach$100 billion industry mark and eventually to $280 billion by the year 2020.Tata AutoComp Sells Stake in Tata Yazaki AutoComp to JV Partner Yazaki CorpTata AutoComp has exited from Tata Yazaki AutoComp, a 50:50 JV between Tata AutoCompSystems and Yazaki Corporation of Japan, by selling its 50% stake to Yazaki Corporation. TheJV Company was incorporated in 1997 and manufactures wire harness at Pune, Sanand,Patnagar, Jamshedpur and Bengaluru plants.
  6. 6. Modi Rubbers and Asahi Organic Chemicals form JV to Exploit Resin Coated Sand (RCS)Market in India India’s Modi Rubbers and Japan’s Asahi Organic Chemicals have joined hands to manufacture Resin Coated Sand in India. Asahi Organic Chemicals will hold 51% and rest of 49% will be held by Modi Rubbers in the JV Company to be formed in the State of Gujarat with the name AsahiModi Materials Pvt. Ltd. The JV will see an initial investment of INR 300 million and is likelyto begin operations in January 2014.
  7. 7. Knowledge Center THE SECURITY INDUSTRY OF INDIASecurity is one of the most important issues in any setting, a home, school, hospital, malls, socialgatherings, et al. But it is also one of the most overlooked issues at times. Maslow, a worldfamous psychologist known for his hierarchy of needs, brought to paper the thought whichpeople generally fail to realize. ‘The second most important need after food & shelter is the needfor protection & security. That comes even before the need for love, social esteem and self-growth. Believe it or not; ask yourself and you’ll know it’s true.’Though we hardly notice it, security finds a place in the country as a full-blown security industrywhich is growing steadily year after year. In fact, it may sometimes be even safe to say that thereare more security guards than the number of policemen today.The security Industry can broadly be categorized into two categories: 1. The Security Services Segment: This segment covers the private manned security services i.e. the security guards and dominates the protection industry in India. This segment is said to have existed since the early 1960s and there are various companies in this sector like G4S and SIS among others who operate nationwide through their regional and city offices. This segment happens to be the country’s largest Corporate Tax Payer. Not only that, it is touted to grow at 40% every year1. 2. The Security Systems Segment: This segment covers security provided through devices like Alarms, System Integrators, CCTVs, Intrusion detectors, Door Intercoms and Access Controls. It is majorly an import based sector owing to the technological expertise that foreign players bring. The security equipment is largely imported from countries like USA, UK, Germany, Singapore, Italy, Hong Kong, Israel, Japan, Korea, China and1 Quoting Col. Jagat Trikha, executive director of the Central Association of Private Security Industry (CAPSI)
  8. 8. Taiwan. Companies like Siemens, Tyco and Bosch have come to India and by collaborating with the domestic businesses have been successful in setting up distribution channels and offering sales & after sales support.The legal framework regulating Security Agencies:To improve the benchmarks for private security in the country and to regulate the industrythrough a licensing process, Private Security Agencies Regulation Act was enacted in 2005. TheAct sets forth various standards and requirements which need to be fulfilled if a Private securityagency wishes to get licensed. Some of them are: 1. Training before deployment. 2. Owners and major shareholders of the agency to be citizens of India. (Foreign firms are however allowed to enter into a relationship with domestic ones) 3. Verification of antecedents of the person wishing to start a business in private security. 4. Maintenance of registers containing details of security officials, managers, supervisors, clients and other such particulars as may be prescribed.Getting registered as a Private Security AgencyThe following simple steps and considerations need to be taken account of, to get registered as aPrivate Security Agency: 1. Deciding the name of the business. Some things that could be ensured about the name are: i. The name should sound positive ii. The name should not be difficult to sound or pronounce iii. The name should be unique from other names in the market iv. The name should be descriptive of the business activity 2. Choosing you business structure: Depending on your requirements and comfort, one can choose any of the following forms of business: i. Public Company
  9. 9. ii. Private Company iii. Sole proprietorship iv. Partnership firm v. Limited liability Partnership Firm (LLP) 3. Registration for Income Tax and other Statutory Authorities i.e. applying for i. PAN (Permanent Account Number) ii. TAN (Tax Deduction and Collection Account Number) 4. Registration of Domain Name: Choosing and registering a domain name is as important as choosing the name for the business. It’s practically wrong to imagine not having an online presence in this age of internet. 5. Considering the FDI provisions: The current FDI policy allows Foreign Investment of up to 49% in the private security sector. However, one needs to check other requirements also. For example, FDI is allowed in companies but there are some restrictions as far as the sole proprietorships and partnership firms are concerned. In LLPs also, FDI is allowed through approval route only, that too only in industries where 100% FDI is allowed through automatic route. 6. Opening a Current Account with the Bank. 7. Obtaining license under Private Security Agencies (Regulations) Act, 2005. 8. Registration under various Labour laws. 9. Registration under Shops & Establishments Act, 1948.Especially after the unfortunate terror attacks have hit the country, the security sector of thecountry is now a full blown industry. This is more so because people have realized that the valueof human lives and their protection is much more than the meager saving as a result of notemploying any security personnel or system. Seeing the developments in the Security Agencyand considering its perennial nature and an evergreen growth potential, it would not be wrong tosay that it offers huge business opportunities for persons who can see the potential in the sector.
  10. 10. CONTACT USPankaj Singla MUMBAI:Japan Desk, Corporate Professionals 403-404, Churchgate Chambers, 5 New Marine Lines, Mumbai-400020DELHI (Head Office)D-28, South Extension Part - I, New Tel: +91 22 22624671Delhi – 110049 Fax: +91 22 22655712 Email: info@indiacp.comTel: +91-11-40622200Dir: +91-11-40622293 FARIDABAD (DELHI NCR):Fax: +91-11-40622201 565, Sector-7B, Faridabad, Haryana-121006Mob:+91-99715-08320Email: Tel: +91 129 4061130 Fax: +91 129 2241017 Email: Bedford (UK) 2-4 Mill Street, Bedford MK40 3HD U.K. Tel: +44 (0) 2030063240 Fax: +44 (0) 2030063241 Email: info@indiacp.comDISCLAIMER: The entire contents of this document have been developed on the basis of relevant statutory provisions and as per theinformation available at the time of the preparation. Though the author has made utmost efforts to provide authentic information however, thematerial contained in this document does not constitute/substitute professional advice that may be required before acting on any matter. Thedocument has been produced only for the informational purposes; the author and the firm expressly disclaim all and any liability to any personwho has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any suchperson in reliance upon the contents of this document.