The Hindu : National : Call for FDI-based relations with Japan

Online edition of India's National Newspaper
Monday, Apr 25, 2005

National

National

Call for FDI-based relations with Japan

Special Correspondent

ODA-based ties have weakened Indian currency, feels industry

NEW DELHI: Even as India is one of the largest recipients of Official Development Assistance (ODA) from Japan, the industry feels that the India-Japan trade ties should shift from the ODA route to larger foreign direct investment (FDI).

Echoing this view in a paper on `India-Japan economic relations: Steady past and bright future', the Associated Chambers of Commerce and Industry of India (Assocham) says that the ODA-based relationship has not strengthened the Indian currency. It has rather weakened it.

Releasing the paper, the Assocham president, Mahendra K. Sanghi, said: "The time has come that India aggressively campaigns for a FDI-based relationship with countries like Japan".

Mr. Sanghi said that in the changing economic scenario, the shift in India-Japan ties from ODA to FDI is also essential to promote Japanese investment in the infrastructure sector such as telecom, power and construction, besides increased manufacturing in the automobile sector.

`Promote tourism'

Tourism and cultural developments between the two countries is another area where possibilities should be explored for Japanese collaboration in popular Buddhist tourism destination such as Ajanta, Ellora, Bodh Gaya, Nalanda, Varanasi and Sanchi.

As per Assocham estimates, Japan has so far provided about yen 3,000 billion as committed under ODA while its actual approved FDI till 2003-04 is less than $ 4,000 million.

Mr. Sanghi has argued that ODA aid had not spurred Japanese manufacturing activity in India. Instead, it had restricted the scope of acceleration of economic activities.

Keeping this in view, the need of hour was that adequate efforts must be made to persuade Japan to diversity its FDI approach towards India and not concentrate its investments only in automobile and consumer durable sectors, the Assocham chief said.

The chamber felt that Japanese consumer durables and food processing industries could be positioned in India where there was ample availability of skilled labour at a reasonable cost.

India, on the other hand, should further liberalise and open its economy to promote free trade and investment so that foreign nationals could also effectively participate in the country's development efforts.

Besides, non-tariff barriers also continued to be one of the most major hurdles impeding India-Japan trade.

Though India had removed quantitative restrictions on imports of all products from April 2001, its exports were facing many non-tariff barriers in the Japanese market in sectors like leather and leather products, textiles, wood and wood products, he said.

Printer friendly page
Send this article to Friends by E-Mail

National