Japan’s complaints on logistics, customs, quality issues in India to be redressed: Goyal

More than 200 investment plans of Japanese companies in India, including factory construction and production line expansion, are stuck due to the Covid-19 pandemic and logistical issues and the country is looking for “bold support” from the Indian government to make things move, Japan’s Minister for Economy, Trade & Industry (METI), Hiroshi Kajiyama, said.

Commerce and Industry Minister Piyush Goyal offered immediate response to concerns on logistics, customs clearance, export procedures and quality issues raised by the Japanese at the online ‘Exclusive Investment Forum’ for Japanese investors organised by the Department of Promotion for Industry and Internal Trade and its Japanese counterpart, METI, on Thursday and said that a “focussed group of key officials” will work on these.

“I want this focussed group on expansion of Indo-Japan trade relationship to meet 50 companies from Japan, which would include 25 already operating in the country and 25 potential investors....Let us work out their concerns,” Goyal said, adding that after about eight weeks another session could be held to discuss their findings and recommendations.

The officials to be appointed to look at Japanese investors’ problems would be from the Departments and Ministries of Commerce and Industry, Railways, Surface Transport and Customs. Based on what the specific problems of the investors were, officials from other Ministries such as Agriculture and Animal Husbandry would be roped in, the Minister said.

Goyal said that investment facilitation should be from both sides, and he also asked Tokyo to work towards addressing the problem of India’s widening trade deficit with Japan.

Japanese investment

Japan is the fourth largest investor in India, accounting for cumulative Foreign Direct Investments (FDI) of $33.5 billion in 2000-20 period, which was 7.2 per cent of India’s total inflows. Moreover, Japanese investments are mostly in the manufacturing sector which creates jobs.

DPIIT Secretary, Guruprasd Mohapatra, said that a new Japanese Industrial Township is being planned in Assam, which will take up the total number of such townships in India to 13.

Sony, Hitachi, Honda, Panasonic, Yamaha, Toyota, Canon, Suzuki and Mitsubishi are amongst the 1,441 Japanese companies in India which run over 5,000 business establishments. But the number of establishments in India is merely 15 per cent of about 33,000 in China and 40 per cent of the over 12,000 in the ASEAN, so there is much scope for growth, pointed out SasakiI Nobuhiko, Chairman, Japan External Trade Organization (JETRO).

Japan and India have great potential to build mutually complementary relationships, Kajiyama said. “Japan is great at hardware production and India is great at software production.... India is rich in top digital talent, while Japan seeks such talent,” he said.

In 2018, the two governments signed the Japan-India digital partnership. “Since then, we have been promoting cooperation in start-up and digital talent,” he said.

In a survey of Japanese companies in India conducted by the JETRO this March, many pointed out lack of price competitiveness, quality issues and inadequate and time-consuming logistics as the main obstacles in their plans of increasing exports, said Shigehiro Tanaka, Vice-Minister, METI, Japan.

The obstacles related to price competitiveness included increasing labour cost and stringent Rule of Origin which prevented FTAs from being utilised, Tanaka said. He added that companies also faced the problem of low quality goods which often do not meet the standard of multinational companies, high frequency of defective items, and broken goods due to rough roads and handling.