India - Japan Investment Dialogue

New Delhi, August 10,1999

The first meeting of India-Japan Investment Dialogue was held in New Delhi on August 10,1999. The Japanese delegation was led by Vice Minister, MITI Mr. Hisamitsu ARAI. Mr. Ajit Kumar, Secretary, Department of Industrial Policy & Promotion, Ministry of Industry, Government of India led the Indian side.

Both sides emphasised the need to strengthen economic cooperation with particular emphasis on investment flows. It was felt that the present Dialogue would help realise that objective, particularly in promoting Japanese FDI into India. The Japanese side, while appreciating the bold economic reforms and steady economic performance of India, notwithstanding the Asian crisis , emphasised the need to further accelerate the reform process. The Indian side reassured the Japanese side about the Government's continued commitment to the reform process. The Indian side reassured the Japanese side about the Government's continued commitment to the reform process. Both sides recognised the immense potential of mutually beneficial industrial cooperation and expressed their joint commitment to realise the same.

The Japanese side noted that there was a potential for steep increase in Japanese. FDI into India. The confidence of Japanese investment in India continued to be strong and could be further strengthened by addressing a few procedural, tariff and tax related issues. India needed to focus specific attention on infrastructure development and the policies related to the auto sector and trading.

The Indian side noted that there already existed a business to business dialogue mechanism between the two countries and the present initiative was perceived as a value addition, as it provided a common platform for both Government and business representatives of the two sides. It was indicated that several initiatives had been taken recently to simplify investment procedures and facilitate smooth implementation of investment proposals. These included, inter-alia, general permission for enhancement in the amount of foreign equity within an approved percentage, downstream investment under automatic route by foreign owned holding companies, a near automatic regime for foreign technology collaboration and the setting up of the Foreign Investment Implementation Authority. Regarding strengthening of infrastructure it was stated that several measures had been taken in that direction such as attractive fiscal concessions, setting up of independent regulatory authorities, and enhancement of budgetary allocation for infrastructure development. The need for Japanese investors to perceive infrastructure inadequacy as an investment opportunity was emphasised.

[i] To maximise Japanese FDI inflows for the year 2000 and beyond

[iii] to identify priority sectors for Indo-Japanese cooperation, and

[iv] to have a concrete plan for promoting technology transfer in priority sectors

Both sides were of the view that given the initiative being taken, a perceptible increase in FDI flows from Japan could be expected in the coming years. To concretise the above mentioned common objectives and to realise the aspirations of both sides it was decided to adopt the following structural mechanism:-

[i] Setting up of three Working Groups, with the involvement of business representatives of both sides, under the aegis of the present India-Japan Investment Dialogue. The Working Groups, in addition to identifying investment opportunities, could also go into impediments faced by Japanese investors.

[ii] Setting up of a Sub-Group to review quarterly progress on the general issues raised during the deliberations and listed in this record, to finalise the constitution and modalities of the Working Groups, and monitor progress.