India-Japan Comprehensive Economic Partnership Agreement

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NEWS Bulletin from Indian Society For Sustainable Agriculture And Rural Development ****************************************** Core sector key to boost trade ties with India: Japan http://www.financialexpress.com/news/Core-sector-key-to-boost-trade-ties-with-India-Japan/212207/ ASHOK B SHARMAPosted online: Thursday , August 23, 2007 at 2320 hrs IST New Delhi, Aug 23 Japan is of the view that its bilateral trade with India can touch $20 billion in the next three years, if India takes necessary steps for developing its infrastructure and

ensure quality production and technological upgrade. The director-general of Japan External Trade Organisation (JETRO), Naoyoshi Noguchi, speaking to FE, said, "Viewing India's potential to emerge as an economic power, our Prime Minister Shinzo Abe proposed to increase the bilateral trade from the existing level of $ 8.5 billion to $20 billion in the next three years. The Indian commerce minister, Kamal Nath agreed to Abe's proposal and also assured to attract Japanese investment to the tune of $ 5 billion in the next five years. But these proposals need to implemented with all practicality." Noguchi proposed that if India wants to step up its exports to Japan it needs to cater to the tastes of Japanese consumers. For this Indian producers need to invite necessary technology transfer from Japan. "Japanese consumers are very quality conscious", he said. He said that apart from automobile sector, Japanese entrepreneurs were interested in investing power and electronics and also in R & D for biotech and pharma sectors. "There is a need for India to develop a favourable climate to attract Japanese investments," he said and hoped that the proposed Delhi-Mumbai Industrial Corridor would provide an opportunity for Japanese entrepreneurs. ------ INDIA-JAPAN PARTNERSHIP CEPA with Japan by year-end, proposes 90% trade duty-free http://www.financialexpress.com/news/CEPA-with-Japan-by-yearend-proposes-90-trade-dutyfree/211990/ ASHOK B SHARMAPosted online: Wednesday, August 22, 2007 at 2314 hrs IST New Delhi, Aug 22 India and Japan have agreed to conclude talks on a comprehensive economic partnership agreement (CEPA) by the end of this year to increase bilateral trade to $20 billion by 2010. Commerce and industry minister Kamal Nath on Wednesday said both sides would hold two rounds of task force meetings each. The next meeting of the task force will be held on September 3 in Tokyo. The CEPA would cover trade in goods and services besides investment promotion and protection. The agreement proposes to make about 90% of trade duty free. "Our need for infrastructure is massive, and in the next five years we will need an estimated $384 billion to bridge the infrastructure gap," Nath said at the India-Japan Business Seminar organised by CII, Ficci

and Assocham here. The minister said the Japanese companies can use the $90-billion Delhi-Mumbai industrial corridor (DMIC) project as a springboard for accessing the US and EU markets. "The resurgence of manufacturing in India is visible in the sustained interest of overseas companies in establishing production centres in India. Factories of Suzuki, Mitsubishi, Toyota, Honda, Asahi and others are going online rapidly, making a range of products for domestic as well as international sales. Currently, there are around 500 Japanese companies operating in India," he said. The minister said India hoped to get minimum $5 billion in investment from Japan over the next five years. Out of the total FDI equity inflows of $56.17 billion from August 1991 to April 2007, Japan accounted for $2.65 billion (around 5.45%). A joint proposal by the India-Japan business leaders'

forum, signed by Reliance Industries Ltd chairman and managing director Mukesh Ambani and Canon Inc chairman and CEO Japan Fujio Mitarai, said the Japanese side demanded relaxation or abolition of restrictions on foreign companies in India. The proposal added "encouraging the penetration of more India companies into the market for BPO of Japanese companies will demand elimination of the 10% tax rate on technical service fees, a matter that remains an issue for the revised India-Japan Tax Treaty." ---------- Abe looks to treble bilateral trade; talks of broader Asia http://www.financialexpress.com/news/Abe-looks-to-treble-bilateral-trade-talks-of-broader-Asia/211986/0 ASHOK B SHARMAPosted online: Thursday , August 23, 2007 at 0312 hrs IST Outlining his vision for a "broader Asia" to be marked by a Indo-Japan strategic global partnership, Prime Minister Shinzo Abe on Wednesday asserted "a strong India is in the best interest of Japan and a strong Japan is in the best interest of India." In his address to MPs in the Central Hall of Parliament, the visiting Japan premier called for signing of the economic partnership agreement soon to firm up relations and raise volume of bilateral trade three-fold. Trade between the two countries in 2006 was about $6.5 billion and according to Abe, it has the potential to reach $20 billion in the next three years. "I likewise urge the Indian side to give their support to enable the early conclusion of this high quality agreement," he said. "Prime Minister Manmohan Singh and myself are steadfastly convinced that Japan-India relationship is blessed with the largest potential for development of any bilateral relationship anywhere in the world," he added. Abe, 53, is the third Japanese leader to address Indian Parliament after Prime Ministers Yasuhiro Nakasone in 1984 and Toshiki Kaifu in 1990. He spoke in the Japanese language. Referring to growing economic ties between the two countries, the Japanese Prime Minister mentioned that a 200-plus business delegation was accompanying him. Outlining various fields in which the two countries can cooperate closely, he promised to help India in the field of energy by providing technology. But, he did not mention

nuclear power. Abe promised to assist India in infrastructure development, particularly the $90-billion Delhi-Mumbai Industrial Corridor and the 2,800-km Delhi-Mumbai and Delhi-Kolkata dedicated freight corridors. Feasibility reports on the 2,800-km corridor would be drawn up in two months. "This is a project of tremendous significance and Japan is actively considering means for financial assistance." He also made references to his country's overseas development assistance (ODA) in afforestation programmes and sought India's cooperation in his "Cool Earth 50" initiative aimed at halving global emissions by 2050 from the current levels. Though Abe avoided making any mention about India's plea to Japan to support its case at the Nuclear Suppliers Group (NSG), a senior Japanese government official on the sidelines of a function said, "We have taken note of India's good track record

on nuclear non-proliferation but was non-committal on backing the civil nuclear deal with the US at the Nuclear Suppliers Group (NSG)." The official added that Tokyo would like to have "some additional explanation" on technical issues related to the Indo-US civil nuclear deal from India and would watch keenly the negotiations New Delhi has with the International Atomic Energy Agency (IAEA) on the safeguards agreement. ------ First currency swap deal to be with Japan http://www.financialexpress.com/news/First-currency-swap-deal-to-be-with-Japan/212038/0 ASHOK B SHARMAPosted

online: Thursday , August 23, 2007 at 0010 hrs IST India and Japan have agreed to sign a currency swap deal to protect themselves against any sudden fluctuations in their foreign exchange reserves. This is India's first ever swap deal with any country. Japan already has swap deals with countries like China, South Korea and Thailand. "A basic agreement has been reached on a bilateral currency swap in response to the short-term liquidity crunch," Japanese Prime Minister Shinzo Abe said here on Wednesday at an industry seminar. Abe, who is on a three-day visit to India to boost trade ties, did not specify the size of the swap agreement. The deal is expected to be finalised by the end of 2007. Under the agreement, India can buy currencies like dollars in exchange for rupees from Japan. It will provide similar accommodation to Japan by taking its currency, the yen and send it dollars,

up to a specified limit. Such arrangements come in handy when foreign exchange reserves dip, to protect the national currency against sudden depreciation. Sanjay Aggarwal, national industry director, financial services, KPMG, said swap deals help even out the demand and supply of currencies. According to the Reserve Bank of India's reference rate on Wednesday, 100 Yen could be exchanged for Rs 35.77. Analysts also said that swap deals would also encourage more inflow of FDI and FII from Japan to India as the currency risks would be perceived to be lower. "At the micro level, it would minimise the currency risk for both parties in international trade, and for forex dealers and companies. This will be conducive to encouraging higher foreign investment," said Ashwin Parekh, director, Ernst & Young. The deal is expected to spur a major step up in investment by Japan into Indian

projects like the Delhi-Mumbai Industrial Corridor. Parekh said swap deals would also help smoothen out call money rates by enabling short-term liquidity management. The agreement with India will also enable both countries to swap foreign currencies like the US dollar or Euro to maintain the value of the rupee and yen in foreign exchange markets. Japan and other Asian countries have signed bilateral currency swap deals under the Chiang Mai Initiative (CMI), a seven-year-old regional network of swap agreements intended to prevent a repeat of the 1997-98 Asian financial crisis. Japan and Thailand signed such an agreement in July, under which Bangkok can swap up to $6 billion, while Tokyo can swap up to $3 billion in case there is need for short-term liquidity. However, none of the credit lines have been tapped so far. The CMI is meant to complement the lending facilities of the

IMF. Japan has swap deals with other Asian countries like Thailand, Korea, China, Malaysia, Philippines, Singapore and Indonesia. ------------- ICICI, Japan Bank in Rs 820-cr pact http://www.financialexpress.com/news/ICICI-Japan-Bank-in-Rs-820cr-pact/211992/ ASHOK B SHARMAPosted online: Wednesday, August 22, 2007 at 2321 hrs IST New Delhi, Aug 22 ICICI Bank and Japan Bank for International Cooperation signed a loan pact totalling Rs 820 crore for reducing greenhouse gas emissions and promoting clean development mechanism projects in India. The purpose of the loan is to fund Indian

companies for promoting clean development projects by reducing greenhouse gas emissions. The pact would finance such projects and support acquisition of greenhouse gas emission credits generated from such projects. The loan is co-financed by private FIs with JBIC giving a guarantee for their co-financing portions. ICICI Bank and JBIC had signed an MoU for cooperation in this field last year. ------------- Hitachi eyes India's nuclear energy sector http://www.financialexpress.com/news/Hitachi-eyes-Indias-nuclear-energy-sector/211991/ ASHOK B SHARMAPosted online: Wednesday, August 22, 2007 at 2318 hrs IST New Delhi,

Aug 22 With the Indo-US nuclear deal in its final stages, the interest among global nuclear power technology providers is heating up. Japan's Hitachi Ltd on Wednesday indicated that it was willing to consider investing in India's nuclear energy sector. Asked if his company was keen on investing in India's nuclear energy sector, Hitachi president and CEO Kazuo Furukawa told reporters here, "We will consider." He added that nuclear energy was vital for power security. Hitachi is not only into next-generation nuclear power plant construction, but also has developed technology for inspection of nuclear power reactors. India is aiming to achieve an ambitious target of 20,000-mw nuclear power generation by 2020. For this, the government would look at setting up around 30 more reactors, each with a capacity of about 1,000 mw. This will need an estimated FDI of approximately $100 billion. Hitachi had in November last year inked a

letter of intent with GE to form a global alliance combining their "new nuclear power plant and services businesses". According to media reports, US-based GE Energy, a unit of General Electric Co, was also interested in entering the nuclear energy sector in India. Japan's Toshiba, which owns US nuclear reactor manufacturer Westinghouse, French nuclear power company Areva and Russia's Atomstroyexport are said to be watching the developments in India closely. -----

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