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Japan asks India to scrap auto policy for FDI

Japan today urged India to scrap its revised automobile policy stating it was against the interests of both the nations.

Speaking on the sidelines of the inaugural session of the Indo-Japan Investment Dialogue, H Arai, vice-minister in the Ministry of International Trade and Industry or MITI, Japan, said the Japanese industry was against the export obligation being placed on car-makers under the auto policy. ''Unless this restriction is removed, it can not facilitate proper flow of investment into India.''

''We are against the export obligation... The MoU route is not acceptable to us as it is not in the interest of both India and Japan. It needs to be scrapped,'' he added.

Besides the auto policy, bureaucratic hurdles and changing tax and excise procedures are other impediments in the smooth flow of foreign direct investment into India. Once these glitches are removed, foreign direct investment inflow from Japan would grow manifold.

The vice minister further stated that information technology, electronics and automobile sectors have been identified as the target investment areas by Japanese corporations.

India, he said, will emerge as the biggest market for Japan in the 21st century.

The event is being organised jointly by the department of industrial policy and promotion, government of India, and MITI.

Speaking on the occasion, minister of state for industry, Sukhbir Singh Badal said initiation of the investment dialogue indicates that the differences pursuant to the Pokhran blasts has been put to rest and serious efforts are now being taken to step up investment flow between the two countries.

''This will greatly strengthen our shared economic interests and provide us with an ongoing mechanism to facilitate Japanese investment into India and foster industrial cooperation between the two countries.''

The minister further stated that though Japanese investment in India has picked up, total flows are still very small compared with Japanese investment in other countries, especially in southeast Asia.

Stating that the magnitude of Japanese investment was over $ 10 billion per annum, the minister set a target of attracting $ 500 million worth of FDI from Japan for the year 2000. Arai stated that the level could be achieved once the auto policy was scrapped.

Speaking on the occasion, Ajit Kumar, secretary (industrial policy and promotion) said 1998 had registered maximum FDI inflow from Japan at around $ 200 million. ''However, this is still very small compared with Japanese investment elsewhere and the opportunities and investment potential in India.''

Kumar said the investment dialogue has been initiated to tap this potential and realise greater investment flows from Japan. ''It is expected that the dialogue mechanism will act as a vehicle for creating greater investor confidence, both among Japanese MNCs and Japanese small- and medium enterprises.''

The dialogue would enable both the nations to focus on the areas that have maximum potential in terms of receiving Japanese investments and also to address problems faced by investors.

UNI

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