Policy Proposals Asia and Oceania Joint Report of the India-Japan Business Leaders Forum 2018
The business leaders of Japan and India salute the resolve of the leaders of Japan and India to work together in the interests of peace and prosperity within the Indo-Pacific region and the world at large through the continued advancement of the Special Strategic Global Partnership between the two countries and the heightened coordination of Japan's Free and Open Indo-Pacific Strategy with India's Act East policy. At the same time, they are strongly hopeful that the two countries will fulfill their roles as engines of global economic growth, by further strengthening their economic partnership under the free and open international economic order and stepping up their cooperation in the domain of innovation and other strategically important areas.
Since its inception in 2007, the Japan-India Business Leaders Forum has been timed to coincide with Japan-India summit meetings and assembled business leaders representing both countries in one place to engage in serious discussions aimed at expanding the level of bilateral economic exchange. A Joint Report summarizing the outcomes of the forum is submitted to the heads of the governments of the two countries with lobbying efforts aimed at translating those outcomes into action. The forum has accordingly contributed to the resolution of numerous bilateral issues and strengthened the ties of collaboration and cooperation by both sides.
Business leaders from Japan and India observed that there have been several initiatives designed to take the India-Japan relationship forward. These include the launch of the Mumbai-Ahmedabad High-Speed Railway (MAHSR) project, inauguration of Japan-India Institute for Manufacturing (JIM), organization of regular workshops on Disaster Risk Reduction, Make in India outreaches organized under the agreed roadmap for promoting Japanese investments in India, opening of India Japan Startup hub in Bengaluru, and increasing cooperation in important sectors such as healthcare, food, defense manufacturing, technology transfer, clean energy, information and communications technology, biotechnology and pharmaceuticals.
This year marks the 11th time this Forum has been held. In the interest of facilitating economic gains with sustained growth in both countries amid drastic changes in the global environment stemming from such factors as rising anti-globalization and protectionist sentiment and rapid advances in digitization, Forum participants deepened their mutual understanding of economic trends and growth strategies in both countries, and put together this Joint Report summarizing the outcomes of their discussions regarding ways to maintain and strengthen the free and open international economic order, bolster economic partnerships, expand economic exchange through improvements in the business environment, and achieve inclusive growth through strengthened cooperation in strategic fields.
The business leaders of Japan and India urge that the leaders of both countries implement the proposals and recommendations contained in this Report and, from their perspectives as members of the business community, are committed to contributing to further advances in the two countries' special strategic and global partnership.
1. Maintaining and strengthening the free and open international economic order and fostering economic partnerships
As concerns mount over the spread of anti-globalization and protectionist sentiment worldwide, it is vital that steps be taken to maintain and strengthen the free and open international economic order that has sustained global stability and prosperity, and move forward with the development of a climate for trade and investment that facilitates free, cross-border flows of goods, services, capital, people, technology, data, and other resources. Steps must also be taken to improve business environments for facilitating business activities through the development of rules for the protection of intellectual property rights and the assurance of fair competition.
From these perspectives, business leaders from Japan and India affirmed that both countries should raise the banner of free trade high and communicate to the rest of the world the significance of free trade as well as their strong commitment to it. They also acknowledged the need to swiftly conclude a comprehensive, high-level agreement on the Regional Comprehensive Economic Partnership (RCEP) that is currently being negotiated. That agreement will need to incorporate provisions for the liberalization of investment and trade in goods and services, the implementation of cumulative rules of origin, and the development of other rules including rules governing the movement of people, policies on competition, intellectual property, e-commerce, government procurements, and the resolution of disputes. In the interest of swiftly achieving these goals, business leaders from Japan and India agreed to sustain their mutual cooperation and help the two countries fulfill their leadership roles.
2. Expanding economic exchange through improvements to the business environment
Actions to maintain and strengthen the free and open international economic order, foster economic partnerships, and develop business environments in both countries that will be fairer, more transparent, and enjoy higher predictability will be extremely important to the goal of accelerating bilateral trade, investment, technology transfers, and exchanges of data and people.
Business leaders from Japan and India strongly commended the implementation of the Goods and Services Tax (GST) by India in July last year, the enforcement of the Agreement between the Government of Japan and the Government of the Republic of India for Cooperation in the Peaceful Uses of Nuclear Energy, and the promulgation of laws concerning bankruptcy. Additionally, in the interest of fostering further progress in the development of an environment that enables companies to pursue their business operations with more freedom and less interference, they strongly urge the governments of Japan and India to swiftly implement the proposals by the business communities of both countries, as detailed in the attachment.
Japan's business leaders call on the Government of India to continue working to streamline and speed up the GST system and related procedures; promote tax system reorganization and rationalization; assure international consistency of tax system including revisions to the Master File requirement; amend and consolidate the labor laws; ensure the free flow of data by rescinding regulations on data localization; promote infrastructure development and reform the project bidding system; improve the transparency of, and consistently enforce, legal and institutional frameworks; develop and digitize general rules on administrative procedure; and ensure the transparency and fulfillment of administrative contracts.
Highlighting their concern over the slow growth of bilateral trade, Indian business leaders called for accelerating free two-way flow of goods and services by concluding mutual recognition agreements for services professionals, addressing barriers to trade and investment in sectors of interest such as Information Technology and pharmaceuticals, and reducing certain taxes such as withholding tax in Japan, among others. In addition, Indian business leaders felt that supply chain linkages and off-shored production arrangements between the two countries needs to be encouraged. Intra-industry trade based on off-shoring of production by major Japanese firms forms the basis of much of the trade between Japan and other major Asian economies like Malaysia, Thailand and Taiwan.
Business leaders from Japan and India hold strong expectations that concrete measures aimed at attaining these desired objectives will be discovered through actions based on roadmaps for the promotion of investment; negotiations with the relevant authorities in both countries by the Confederation of Indian Industry (CII), the Japan Chamber of Commerce and Industry (JCCI) in India and other industrial organizations, and the Embassy of Japan; and the discussions from regular annual meetings of the Subcommittee on Improvement of the Business Environment that was established under the India-Japan Comprehensive Economic Partnership Agreement (IJCEPA).
The progress with the Asia-Africa Growth Corridor - where Indian and Japanese companies are collaborating to undertake joint projects in Africa - was taken note of. It was felt that this could be a good model for Indian and Japanese companies to follow while investing in third country markets.
3. Achieving inclusive growth through strengthened cooperation in strategically important fields
The internationally uniform Sustainable Development Goals (SDGs) for the achievement of inclusive growth and sustainable societies were established by a resolution of the United Nations summit that convened in September 2015. Achieving the SDGs will demand that the private sector exercise its ingenuity and strengths in innovation.
In Japan, private sector cooperation is behind efforts to create Society 5.0, a vision for balancing economic development with the solution of societal issues through the pursuit of a broad array of innovations that fully harness advanced technologies. In India, a drive is under way to fuel the creation of innovations through Digital India, Startup India, and other initiatives. Efforts to further strengthen initiatives of this kind by both countries and pursue cooperation that reciprocally complements their competitive positions will enable Japan and India to collaborate and lead in the creation of innovations that are aimed at achieving inclusive growth. Accordingly, to that end, both countries should pursue heightened levels of people-to-people exchanges and work to develop a business environment that ensures the free flow of data and in other ways fosters the mutual utilization and leveraging of technology and data.
Measures in infrastructure development that support inclusive growth will also be important. Japanese and Indian business leaders welcome concrete accomplishments such as the exchange of notes concerning the Mumbai-Ahmedabad High-Speed Railway (MAHSR) project, which is a symbol of the "new era in India-Japan relations." Furthermore, to strengthen India's industrial competitiveness, foster sustained and inclusive growth, and boost national standards of living, they call for the continued development of roads, railways, seaports, airports, power generation and smart grids, water treatment facilities, industrial complexes, and other elements of infrastructure including the Dedicated Freight Corridor (DFC) construction project, the Delhi Mumbai Industrial Corridor Project (DMIC) and related projects. They noted that substantial progress has been achieved in DMIC project where trunk infrastructure works are nearing completion and industrial activities have begun with allotment of land in four cities.
In that endeavor, and from the perspective of promoting the development of quality infrastructure through undertakings in public-private cooperation, Japanese members suggested that it will be necessary to implement and expand a comprehensive evaluation system for Indian infrastructure project bidding processes that appropriately assesses economic viability and applied technologies in terms of life-cycle costs, implement sweeping tax exemption for yen-loan projects, and optimize the sharing of risks and roles between the public and private sectors, including government-backed guarantees and land appropriations by the government in public-private partnerships (PPPs).
Also, from the perspective of balancing environmental protection with the stable supply of electric power that forms a foundation for industrial operations and people's lives, business leaders in Japan and India strongly commend the conclusion and implementation of the Agreement between the Government of Japan and the Government of the Republic of India for Cooperation in the Peaceful Uses of Nuclear Energy, look forward to substantive forms of cooperation in that area as well as the development of a climate conducive to such cooperation, and call for stronger bilateral cooperation in the promotion of highly efficient and clean coal- and gas-fired power generation and the large-scale introduction of renewable energies. In the spheres of defense and security, stronger bilateral cooperation in high-tech fields based on summit-level agreements will also be important.
Training and securing the quality human resources to support these efforts in cooperation will be essential. Japan is playing a vital role in India's capacity building. The Champions for Societal Manufacturing project, led by CII with support from Japan International Cooperation Agency (JICA), has helped enhance the managerial competencies for manufacturing in India. CII has been appointed as a Sending Organisation by the Ministry of Skill Development & Entrepreneurship, Government of India, to support the implementation of the Technical Intern Training Programme. The first batch of 15 interns received an extensive 4-month pre-departure training by experts from Japan in March 2018. In addition, the Japan India Institute of Manufacturing (JIM) is being expanded and the number of such programs in India increased. JIM was established after a Memorandum of Cooperation (MoC) was signed in Tokyo on November 11, 2016 between Ministry of Economy, Trade and Industry, Government of Japan (METI) and Ministry of Skill Development and Entrepreneurship, Government of India (MSDE), for a "Manufacturing Skill Transfer Promotion Program" The program imparts practical skills in Japanese-style of manufacturing to the participants. Five such institutes are already operational.
Business leaders in Japan and India welcome the progress made in this area with projects approved by the leaders of both countries. Furthermore, they reaffirm the importance of enhanced initiatives, including university undergraduate and post-graduate student exchange programs, corporate internships, language programs, and skills training, and urge continued bilateral cooperation in the pursuit of these initiative.
Japan and India are two countries that have maintained historically strong ties and share the same fundamental values. Business leaders from Japan and India are confident that joint engagement by both countries will contribute not only to the sustained growth of their own economies but also to peace and prosperity throughout the Indo-Pacific region and the world at large as well as the achievement of the SDGs.
Finally, the members of this Forum wish to express their deep appreciation for the trust placed in them by H.E. Mr. Shinzo Abe, Prime Minister of Japan, and H.E. Mr. Narendra Modi, Prime Minister of India.
India-Japan Business Leaders Forum
India-Japan Business Leaders Forum