The Hindu Business Line : Japan trade organisation seeks tax incentives to invest in India

The Chairman and CEO of Japan External Trade Organisation (Jetro), Mr Osamu Watanabe, who is leading a 73-member delegation to India, today said Japanese companies would welcome incentives in the form of corporate tax exemptions or deduction in corporate tax.

Mr Noritada Ito, President of auto component manufacturer Taiyo Corporation, also supported the demand for corporate tax relief for Japanese companies, saying such incentives will help India attract incremental foreign investment.

"Many South East Asian and East Asian countries have offered relief in corporate tax in the form of either exemption for 5-12 years or reducing it by half. This not only brings in more FDI into the country but also results in benefits such as creation of employment, increase in national income and technology transfer," he said.

The delegation raised this issue in its meeting held earlier on Monday, with the Prime Minister, Dr Manmohan Singh.

Dr Singh is learnt to have responded by saying that it would be difficult to take such steps in a large country like India, and India was taking broad steps such as decreasing the overall incidence of corporate tax.

Labour issues: Mr Watanabe at a press conference on Monday also said that Japanese businessmen were watching with "keen interest" labour-related issues in their Indian subsidiaries. He said future investments by Japanese companies in India may depend on how smoothly labour disputes are resolved by the trade unions and Japanese managements operating in India. He was replying to a query on whether incidents such as the strike by workers of Toyota Kirloskar in Bangalore and the trouble between the workers and the management of Honda Motorcycles and Scooters India could affect business relationships.

Mr Watanabe said resolutions between the company management and the workers should not only be smooth but also transparent. He also said that issues relating to labour productivity in India are largely responsible for the country lagging behind other East Asian countries in terms of investment potential, but was quick to add that India is catching up fast and could soon become the major investment destination in Asia. The signing of an economic agreement between the two countries would also aid in improving trade.

Economic partnership: The Deputy Director General for Trade Policy at Japan's Ministry of Economy, Trade and Industry, Mr Masaki Hirano said, "India and Japan should sign Economic Partnership Agreements (EPA) as soon as possible so that barriers to bilateral trade can be removed. EPAs will facilitate lower customs duty, an improved tax regime and lesser bureaucratic delays besides envisaging special incentives for encouraging Japanese SMEs to come and invest in India."

Mr Hirano said a joint study was being conducted by India and Japan to identify the areas for an EPA and that a report of this study will be submitted to the respective Governments by June.

The Jetro delegation is on a seven-day visit to India. Besides the meetings with the Prime Minister and the Commerce and Industry Minister, Mr Kamal Nath, on Monday, the delegation members are expected to hold a series of meetings with industry representatives.

More Stories on : Foreign Trade | Industry Associations

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page