Indo-Japan Trade and Investment Highlights: India and Japan to work IT together Japanese firm Looking to Strengthen Aviation Defence Presence in India Omori to Acquire Majority Stake in Multi Pack Systems Return of Mazda in India Currency Swap to Control Falling Rupee and Improving Financial Ties with Japan Suzuki to make India Hub for Export of Left Wheel Drive Swift Models to other Emerging Markets India and Japan Launch Joint Research Programs in Applied Science The Anime Bond Knowledge Center: Overview of Indian Labour Law

1. 2013
Indo-Japan Trade & Investment
Bulletin
September Issue
Japan Desk, Corporate Professionals

2. Indo-Japan Trade & Investment Highlights
India and Japan to work IT together
Japanese firm Looking to Strengthen Aviation Defence Presence in India
Omori to Acquire Majority Stake in Multi Pack Systems
Return of Mazda in India
Currency Swap to Control Falling Rupee and Improving Financial Ties with Japan
Suzuki to make India Hub for Export of Left Wheel Drive Swift Models to other
Emerging Markets
India and Japan Launch Joint Research Programs in Applied Science
The Anime Bond
Indian and Japanese Companies Join Hands for Bio-Polyol Production and Supply
NEC Exploring Opportunities to Expand R&D Efforts in India
India-Japan to Work together to Stabilise LNG Prices
Toshiba to Expand T&D Business in India through Acquisition
India and Japan may Partner in Setting up an Electronics Township in India
Nissin has Appetite for Acquisitions in India
Bharti SoftBank to Exploit Opportunities in Mobile Gaming Market
Suntory may again get to raise the Toast in India
Knowledge Centre
Overview of Indian Labour Laws:
INDEX

3. India and Japan to work IT together
Fujitsu Research Institute and India‟s Nasscom, an IT representative body, have signed a pact to
promote cooperation in the information technology-business process management sector. Where
on one hand this pact would enable the Japanese businesses to access vital information about
India and its IT - BPM Industry, on the other it will provide Indian vendors an opportunity to
exhibit their service capabilities.
Japanese firm Looking to Strengthen Aviation Defence Presence in India
ShinMaywa Industries Limited is looking to identify an Indian partner who would collaborate for
maintenance, repair and overhaul of the ShinMaywa US-2 amphibious aircraft which is to be
made available to the Indian Navy. Consultations have been held with several companies but
nothing has been finalized as yet. The Company has had a 20 year long limited presence in the
Indian aviation sector and is looking to make the most of strong Indo-Japan relations.
Omori to Acquire Majority Stake in Multi Pack Systems
Mumbai based Multi Pack Systems will soon have a holding company; Japan‟s Omori
Machinery Co. which is looking forward to purchase a 51% stake in the Company for Rs. 200
Crores1
. Omori, which has previously entered China, Europe and North America, will help the
Company in expanding its product and market base. As the name suggests, both the companies
operate in the packaging industry with Omori manufacturing packaging machines and Multi
Pack Systems providing packaging solutions.
Return of Mazda in India
After conducting a comprehensive research on Indian automobile market and its various
parameters, Japanese auto maker Mazda Motor Corp. is looking to re-enter India after it has
1
1 Crore = 10 Million
Indo-Japan Trade & Investment Highlights

4. stayed away for 4 years. This time over, the company may see the country as a production and an
export hub. The company has been facing an increased demand from various international
markets and is eager to hit its global sales target of 1.7 million vehicles. Once Mazda has
completed its 3 year business plan, it will consider the prospect of entering India very seriously
and plans to offer wider range of vehicles this time.
Currency Swap to Control Falling Rupee and Improving Financial Ties with Japan
The Indo-Japan financial ties are expected to strengthen further after the currency swap
arrangement was signed between India and Japan in Russia recently. The agreement raises the
currency swap arrangement between the countries from USD 15 Billion to USD 50 Billion. This
move is going to be favourable to the Indian Rupee which recently tested its lowest ever against
the US Dollar. It is being said that the arrangement will not only be beneficial to both these
countries but also to other economies in the Asian region.
Suzuki to make India Hub for Export of Left Wheel Drive Swift Models to other Emerging
Markets
Considering that the manufacturing capacity at its Indian arm is currently underutilized, Japanese
automaker Suzuki Motor Corporation is planning to shift the export base of its famous Swift
model, a hatchback, to India. Maruti Suzuki has so far not have the capability to manufacture
cars meant for left-wheel drive traffic and hence cars for West Asian, African and Latin
American markets were being manufactured in Japan only. In Japan, Suzuki now would produce
Swift only for the home market or for developed markets that require a bigger 1.4 litre petrol
engine.
India and Japan Launch Joint Research Programs in Applied Science
India‟s Ministry of Science and Technology and Japan‟s largest research organization RIKEN
have signed a Memorandum of Understanding (MoU) on 14th
September 2013. The MoU has
been signed for launching joint research programs in the field of biology and related applied
sciences. It is expected that such cooperation will not only boost exchange of information in the
concerned field but would also strengthened collaboration between the countries.

5. The Anime Bond
One of the most loved cartoon series in Japan, Anpanman has found a huge acceptance in India.
Japan‟s trade and industry minister Toshimitsu Motegi visited Delhi recently and signed an
agreement to promote cooperation between the animation industries of India and Japan. It is
hoped that in furtherance of this agreement, a TV animation serial would soon be launched.
India, which is known for the abundance of hands willing to work, is the perfect hub for
animation, an industry which still continues to be labour intensive.
Indian and Japanese Companies Join Hands for Bio-Polyol Production and Supply
Japanese chemical companies Mitsui Chemicals Inc. and Itoh Oil Chemical Co. Ltd have
announced a joint venture with India‟s Jayant Agro-Organics Ltd, a leading producer of castor
oil, for production of “bio-polyol” which is made from non edible plant derived fatty acid. The
partnership of the three companies is expected to establish a stable supply base for
overwhelmingly cost competitive bio-polyol. Jayant Agro will hold 50% in the JV company
whereas Mitsui and Itoh will have stake of 40% and 10% respectively.
NEC Exploring Opportunities to Expand R&D Efforts in India
Japan‟s electrical giant NEC is looking forward to expand its research on Indian energy market
through collaboration with the Indian Institute of Technology, Delhi and the Energy Resources
Institute. The collaboration is expected to yield a better understanding of the Indian scenarios to
the Company. The research is expected to involve micro-grids for new townships, energy
management systems for commercial buildings, photovoltaic (PV) energy integration into the
main grid, and study of energy market, including tariff structures. NEC previously partnered with
SRM University in Chennai through which it is working on managing energy operating expenses
across its campus.
India-Japan to Work together to Stabilise LNG Prices
India's Petroleum Minister M. Veerappa Moily discussed the LNG pricing and procurement
issue with Japan's minister of economy and trade Toshimitsu Motegi during a meeting in
Tokyo. It was discussed that Japan and India, as major LNG consuming countries in Asia, will
work together towards developing a market environment which would help in effective, stable

6. and globally competitive LNG procurement. The counties have also decided to set up a
multilateral joint study group on LNG.
Toshiba to Expand T&D Business in India through Acquisition
Japanese Company Toshiba Corp has acquired a major part of India‟s Hyderabad based Vijai
Electricals Limited‟s transmission and distribution (T&D) business for around USD 200 million.
The acquisition is expected to be completed in November and a new company will be established
to absorb the acquired business and integrate its design and manufacturing technologies for T&D
systems. This company it is being said will serve as the core production base for Toshiba in
expanding its T&D business in India.
India and Japan may Partner in Setting up an Electronics Township in India
India and Japan are considering the possibility of setting up a Japanese Electronics
Manufacturing Township. It is expected that such a township will help India reduce imports of
electronic goods and contain trade deficit. The decision will be taken up in the ensuing meeting
of the Joint Working Group of India and Japan which will be formed for increased cooperation in
the IT and Electronics Sector. In the meanwhile, a Japan Help Desk has been set up in the
Department of Electronics and Information Technology to help Japanese companies investing in
electronics sector in India.
Nissin has Appetite for Acquisitions in India
The Japanese popular instant noodles maker, Nissin Foods is in talks to buy Capital Foods, an
Indian processed foods and ingredients company. Capital Foods which is the maker of instant
Chinese noodles, soups, condiments and curry pastes among various other things, is expecting an
enterprise valuation of INR 5-6 Billion and hence the transaction may require a considerable
time to execute. What is interesting to note is that the 40% owner of Capital Foods has denied
having engaged in discussions for exiting the business and hence the picture is currently unclear.
Bharti SoftBank to Exploit Opportunities in Mobile Gaming Market
Bharti SoftBank (BSB), a joint venture between India‟s Bharti Enterprises and Japan-based
SoftBank, is betting on the mobile gaming market through launch of Tiny Mogul Games. BSB

7. has set itself ambitious target of capturing 10% of the Smartphone users in India by this year-
end. The company is planning to tie up with mobile service providers for better exposure to the
users and claims to have already tied up with Airtel, Vodafone and Idea Cellular.
Suntory may again get to raise the Toast in India
Japan‟s Suntory is said to be in talks with Indian liquor maker Radico Khaitan for purchase of a
minority stake of 26% stake in the company for a consideration of INR 870 Crore. It is said that
the terms of the proposed share purchase deal may further allow Suntory to pick up an additional
stake of 23% in the future. It is noteworthy that Radico Khaitan already markets Suntory‟s
premium whisky brands Yamazaki single malt and Hibiki in India. From unsuccessful attempt,
in 2009, to acquire stake in Indage Vinters to the recent stake acquisition in Tilaknagar industries
along with Pernod Ricard, Suntory has been very keen to make an active presence in India.

8. Overview of Indian Labour Laws
Labour laws in India form a part of the concurrent list of the Constitution of India, 1950 (the
“Constitution”) and therefore both the central government (“CG”) as well as the state
governments (“SGs”) have the power to enact laws to regulate labour matters in India. Under the
Constitution, the need for protecting and safeguarding the interest of labour as human beings has
been enshrined in Chapter-III2
and Chapter IV3
. The Ministry of Labour and Employment, a
branch of the Government of India, is the apex body for formulation and administration of the
rules and regulations and laws relating to labour and employment in India.4
The Indian labour laws have been designed to address various issues such as resolution of
industrial disputes, working conditions, labour compensation, insurance, child labour, equal
remuneration etc. and are in compliance with International Labour Organisation standards. The
employees can be classified into two broad categories namely „management personnel‟ and
„workmen‟. Managerial, administrative or supervisory employees drawing a salary of
Rs.10,000/- or more per month are considered management staff/ personnel5
. Typically,
managerial personnel are governed by the terms and conditions of their contracts of employment,
service rules and agreements negotiated with the employer, if any, and do not enjoy any
additional protection of law or security of service. Workmen, on the other hand, have been
defined as the class of workers performing non-supervisory work including any manual,
unskilled, skilled, technical operation or clerical work for hire or reward. Workmen enjoy several
protections, (majority of which deal with social security measures) benefits and amenities
including terminal benefits.
2
Fundamental Rights, Articles 16, 19, 23 & 24
3
Directive Principles of State Policy, Articles 39, 41, 42, 43, 43A & 54
4
Note: The website of this Ministry can be found at: http://labour.nic.in/; similarly, ministries of labour at state level are responsible for
administration and formulation of rules and regulations relating to the labour laws for the respective states.
5 Section 2(s), The Industrial Disputes Act, 1947
Knowledge Center

9. In view of the sheer volume of labour laws that are in force in India, their applicability to a
particular organization is determined and affected by a variety of factors such as sector, place,
and number of employees and can be discussed by grouping broadly under the following heads:
1. Wages and Bonus: The labour laws regulating the wages of the workers in India include
„The Payment of Wages Act, 1936, which aims to facilitate the payment of wages to workers
in a timely manner, „The Minimum Wages Act, 1948‟, a law that seeks to fix the minimum
rate of wages in certain employments6
, and Payment of Bonus Act, 19657
, wherein the
employer is required to pay bonus to persons on the basis of profits or on the basis of
production or productivity.
2. Health and Safety: Workmen‟s Compensation Act, 1923 compensates a workman for any
injury suffered during the course of his employment or to his dependents in the case of his
death. It provides for the rate at which compensation shall be paid to an employee. It is
pertinent to mention that this is one of many social security laws in India. Another example is
the Employees‟ State Insurance Act, 1948 (ESI), which is applicable in case of sickness,
maternity and employment injury, and other related matters. Under ESI, the employees are
entitled to receive medical relief, cash benefits, maternity benefits, pension to dependents of
deceased workers and compensation for fatal or other injuries and diseases. The Factories
Act, 1948 (FA) is another milestone in the CG formulated labour laws8
. The FA lays
emphasis on the cleanliness and comfort of the labour inside the factories. Moreover, health
and safety measures, to be adhered inside the factories, have been laid down to ensure a
healthy and safe work environment for the labour. Also, the state specific shops &
establishment acts play an important role in regulating the working conditions of workers
covered under such laws.
3. Social Security: India does not have a comprehensive social security law. However, various
laws relating to social security and insurance adopted by the CG and the SGs regulate social
6Note: minimum rates of wages are revised on a regular basis by keeping account of the inflation and cost of living. Minimum wages under the
act may be classified by nature of work, location and numerous other factors at the discretion of the government. Most importantly the wages are
fixed in a way to curb exploitation of the labour, vulnerable to exploitation.
7
Payment of Bonus Act, 1965 is applicable to the enterprises employing 20 or more persons.
8
Note: The FA covers all manufacturing processes and establishments falling within the definition of „factory‟. Applicable to all factories using
power and employing 10 or more workers, and if not using power, employing 20 or more workers on any day of the preceding 12 months. Certain
specific facilities have been made mandatory for large factories; ambulance room, if 500 or more workers are employed, canteen for a factory
having 250 or more workers, rest rooms / shelters with drinking water where 150 or more workmen are employed, crèches if 30 or more women
workers are employed at a factory, full time welfare officer for factories having 500 or more workers, and requirement of safety officer if 1,000
or more workmen are employed, are some of the key highlights of the act.

10. security collectively. One of the important social security measures comes in the form of
Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPF), which ensures
the financial security of the employees in an establishment by providing for a system of
compulsory savings by way of establishing a contributory provident fund9
. Similarly,
Payment of Gratuity Act, 1972, (PGA) ensures that gratuity is payable to the employee if he
or she resigns or retires after rendering continuous services for five (5) years or more and is
linked to the number of years in service.10
4. Leave and Benefit: Laws made by the CG are the principal regulators of leaves in India. The
Maternity Benefit Act, 1961 (MBA)regulates the employment of women and maternity
benefits for workers having worked in the establishment for six weeks immediately following
the day of her delivery, miscarriage or medical termination of pregnancy11
. Leaves for the
factory workers covered under FA are also regulated thereunder. The FA also lays down
standards for working hours, minimum overtime wages, annual leaves and employment of
workers under certain age to ensure social and economic justice to the labour. Apart from the
CG laws, laws formulated by SGs such as state specific Shops and Establishment Acts, also
provide specifications for working hours, leaves, holidays and overtime.
5. Industrial Relation And Dispute Resolution: It is important to discuss that the Indian
labour laws are not much supportive of „at-will‟ employment, a concept pioneered in the US.
The retrenchment of workers in some cases is governed through government authorities that
need to be consulted and taken prior permission from before a worker may be retrenched or
laid-off12
.The Industrial Dispute Act, 1947 (IDA) specifically governs the retrenchment of
workmen at a workplace having workmen above a certain limit13
and provides for procedure
to be followed at the time of lay-off and retrenchment14
. Apart from the retrenchments, the
IDA is an important legislative tool to secure industrial peace and harmony; it provides
9
Note: EPF requires that employees‟ contribution shall be at least equal to the contribution payable by the employer. Minimum contribution by
the employees shall be 10-12% of the wages. However this amount shall be payable to the employee after their retirement and could also be
withdrawn partly for certain specified purposes. It is important to highlight that EPF shall be applicable to industries employing 20 or more
persons and any other class of establishments employing 20 or more persons notified by the Government.
10
Note: PGA is applicable to all establishments employing 10 or more workers. Section 4(3) Payment of Gratuity Act, 1972 mandates that
gratuity be payable at the rate of 15 days salary of the employee for each completed year of service subject to a maximum of 1,000,000.
11
Note: Under MBA, every female employee who has worked for a minimum of 80 days in an organisation is entitled to paid maternity leave of
12 weeks.
12
Note: Termination of workers in India is governed by The Industrial Dispute Act, 1947, specific Shops & Establishment laws at state level and
employers‟ standing orders [governed through „The Industrial Employment (Standing Orders) Act, 1946‟]
13
Section 25A of the IDA
14
Chapter VA and VB of the IDA

11. machinery and procedure for the investigation and settlement of industrial disputes through
negotiations and arbitration15
and has also provided for prevention of illegal strikes and lock-
outs16
. The IDA provides for the power of the government to refer any industrial disputes to
the labour boards, courts or industrial tribunals through the department of labour under the
respective SGs.17
From the Perspective of a Foreign Investor:
The Indian labour laws are often viewed as draconian and arbitrary by the foreign investors.
However, for the large part, such view may be termed as overly pessimistic if not a
misconception due to lack of information and inability to fully understand the labour laws in
India and their applicability. There is no denying the fact that the labour laws in India tend to be
inflexible and vague at times but a better understanding of the law and its implementation may
resolve a few issues. From the point of view of a foreign investor in India, it is important to
understand the applicable labour laws and the effects of non-compliance. The subsidiaries of
foreign companies in India are treated at par with other Indian companies so far as the
applicability of labour laws is concerned and no special labour laws govern such subsidiaries.
Following are example of some of the known best practices adopted by Indian companies to
avoid labour disputes:
1. Identify the long term requirement of employees at an early stage.
2. Identify the class of workmen and employees who are not covered under definition of
workmen.
3. Appointment letters of the workers must be prepared very carefully in order to clearly
define the employment terms and conditions including clauses for wages, benefits, non-
compete, confidentiality, term, termination etc.
4. Depending on the requirement, use of fixed term contracts for workmen is also one of
the measures to minimize any future disputes.
5. Regard to local laws of the State while drawing up the contracts.
15
Chapter III (Sections 10 and 10A) of the IDA
16
Chapter V (Section 22 to Section 25) of the IDA
17
The process for resolution of labour disputes starts with filing of a petition before Labour Conciliation Officer and in case no compromise is
possible, the said officer sends a failure report to the Government. After consideration of the said report, the Government may send a reference to
the Labour Court/ Industrial Tribunal. In certain matters, the labour dispute can be directly filed in the court concerned.

12. To Conclude…
The labour laws in India are mainly focused on protecting and safeguarding the interests of
workers in general and those who constitute the poor, deprived and disadvantage sections of the
society, in particular, with due regard to creating a healthy work environment for higher
production and productivity and to develop and coordinate vocational skill training and
employment services. Government is also focused on promotion of welfare and providing social
security to the labour force both in organized and unorganized sectors, in tandem with the
process of liberalization. These objectives are achieved through enactment and implementation
of various labour laws, which regulate the terms and conditions of service and employment of
workers. Although there are said to be too many laws in India governing the labour affairs in the
country that tend to give a negative impression about the whole labour regime, there is yet a hope
that with better understanding and planning a manageable and business friendly labour structure
can be created.
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. CONTACT US
PANKAJ SINGLA
Japan Desk, Corporate Professionals
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Delhi – 110049
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