Japan telecom giant SoftBank to invest $10bn in India

Japanese telecom and internet giant SoftBank on Monday announced its intent to invest nearly $10 billion (around Rs 60,000 crore) in India over the next few years, with Masayoshi Son, the $92 billion conglomerate's chairman and founder, expected to kick off investments during his trip to India, where he is expected to meet several entrepreneurs .

Son mentioned the investment intention during his meeting with communications and IT minister Ravi Shankar Prasad, an official statement said, adding that India is "the top most priority for SoftBank".

Japan's richest man, who had invested $20 million in Chinese e-commerce giant Alibaba in 2000, is eyeing investments in e-tailing and technology companies in India, said sources privy to the discussions. Son is learnt to have suggested that the Centre should speed up the rollout of telecom infrastructure and quickly move to nationwide 4G services.

SoftBank is investing $627 million in Delhi-based e-commerce player Snapdeal, the biggest by any Japanese investor, and also pumping in as much as $180 million in taxi hailing startup Olacabs which competes directly with Uber.

Softbank so far runs a joint venture with Indian telecom major Bharti (Bharti Softbank) here and has invested in Bangalore-based mobile advertising network InMobi. The mammoth investment plan from SoftBank comes at a time when privately held Indian consumer tech companies are witnessing soaring valuations and seeing investors line up expecting high returns. Sources said SoftBank had also held talks with mobile payments companies Paytm and Freecharge and that Masa will be meeting a few other startups on his India trip.

(Prime Minister Narendra Modi in a meeting with CEO of SoftBank Corporation, Masayoshi Son, in New Delhi: PTI Photo)

Fifty-seven-year-old Son is Japan's richest man with an estimated net worth of $20 billion having surpassed Tadashi Yanai, chairman of Fast Retailing which runs Uniqlo, post Alibaba's IPO. SoftBank is the single largest shareholder in the Chinese e-commerce behemoth with a 34% stake in the Jack Ma-led company. SoftBank had acquitted the US mobile services provider Sprint in 2012 and had made attempts to buy T Mobile earlier this year ( the bid was later withdrawn) to collectively take on the two biggies AT&T and Verizon in the American mobile market.

SoftBank is expected to have picked up about 20-25% stake in Snapdeal and Olacabs each, however, this could not be independently confirmed by TOI. A venture capitalist on conditions of anonymity said that SoftBank only comes in when it can pick up a significant minority stake in ventures which is the case in both Snapdeal and Ola, he said.

Olacabs raises $210 million from Japan’s SoftBank Corp; enters $1b Club

Taxi service aggregator Olacabs has raised $210 million from Japan's SoftBank Corp at a valuation of nearly $1 billion (Rs 6,100 crore), people familiar with the development said, as it joins the league of India's most valuable startups and squares off against Uber as well as other venture-funded cab service marketplaces.

An announcement could be made as early as next week, when SoftBank Chairman Masayoshi Son visits India and makes official his group's investments of over $1 billion in Indian startups. ET reported that online retailer Snapdeal is in line to snag $650 million and mobile marketplace Paytm up to $300 million from the Japanese conglomerate which booked an estimated $5 billion gain from the IPO of Chinese ecommerce giant Alibaba last month. "The company is valued close to $1 billion," a source said, referring to Olacabs, which was founded in January 2011 by IIT-Bombay alumni Bhavish Aggarwal and Ankit Bhati.

Olacabs declined to comment. Soft-Bank did not reply to an email seeking its view. Olacabs started life in Mumbai but is now based in Bangalore.
It is backed by Sequoia Capital, Hong Kong's Steadview Capital and Tiger Global. Kunal Bahl, the cofounder of Snapdeal, is an angel investor in the company. The funding is an important milestone for Indian startups that are increasingly gaining the attention of deep-pocketed global investors looking to cash in on India's entrepreneurial prowess and the country's vast market opportunity.
Online retail has grabbed most of the attention and money so far—market leader Flipkart alone has raised $1.2 billion this year—but taxi marketplaces and realty portals are expected to be where the next battles to gain consumers and market share will be fought. An indication of the rising interest in the taxi aggregation market is the fact that Olacabs raised Rs 250 crore only in July, when it was valued at Rs 1,000 crore. What has also excited investors is the entry into India of Uber, the cab hailing app that has been making waves across the world.

        

San-Francisco based Uber, which is barely four years old raised $1.2 billion, at a valuation of $18 billion, in June this year. Uber entered India in August 2013 and has been recruiting taxi owners rapidly. Jaspal Singh, the cofounder of Valoriser Consultants which provides market research services for transportation companies, said the funding and valuation of Olacabs are an indication that investors are betting on rapid growth prospects. "Their longterm strategy is to expand the market size by attracting first-time riders and enter into new geographies," he said. Over two million taxis are registered in India and the market is estimated to be worth over $7 billion.

Companies like Olacabs do not operate their own taxis but provide the technology platform that links taxi owners with passengers. Ola, which is launching its service in one city every two weeks, claims to have around 33,000 cars on its platform. In about three and ahalf years, it has built a presence in 19 cities so far. The latest funding for Olacabs is likely to put pressure on Taxiforsure, its main Indian competitor which has also raised an estimated $50 million this year. Taxiforsure, cofounded by IIM-Ahmedabad alumni Aprameya Radhakrishna and Raghunandan G, is backed by Accel Partners, Bessemer Venture and Helion Venture.

Japan to help Andhra Pradesh develop new capital

Representatives of various economic agencies of Japan on Wednesday expressed interest in building a smart capital city for Andhra Pradesh in Vijayawada-Guntur region besides transferring technology in agriculture and food processing sectors.

A delegation comprising representatives of Japan External Trade Organization, Japan Bank for International Cooperation, New Energy and Industrial Technology Development Organization, Japan International Cooperation Agency and officials of Japan embassy held an "exploratory meeting" with Andhra Pradesh chief minister N Chandrababu Naidu at the secretariat here.

The delegation informed Naidu that Japan was keen on developing an industrial park that would have a dedicated utility centre in the state, an official statement said. 

The Japanese also expressed interest in setting two 4,000 MW thermal plants in Visakhapatnam and Srikakulam districts and a 2,000 MW solar power unit in Anantapuram district.

A joint working group has been constituted to work out modalities of the projects, it said, adding that the visiting representatives expressed readiness to transfer technology in agriculture and food processing sectors.

The Japanese delegation informed the chief minister that it would be meeting officials of 100 companies in New Delhi next month and wanted a representative of Andhra government to attend the event.

This would be a prelude to the proposed visit of Naidu to Japan next month.

Japanese auto component firms eye bigger pie of Indian market

Auto components makers are set to get a boost as Japanese car makers are increasing localization in their end products. Photo: Bloomberg “We are here as we have a future in India,” said Kazuhisa Takai, vice president at Sakura Autoparts India Pvt. Ltd. Takai’s firm is one of eight Japanese auto component firms setting up manufacturing facilities in the outskirts of Chennai for India Yamaha Motor Pvt. Ltd’s second factory in the region. Takai’s statement sums up the sentiments of a number of Japanese auto parts makers. They are looking to set up and expand in India to meet the needs of auto makers from their country as Toyota Motor Co., Suzuki Motor Corp., and Honda Motor Co. embark on an aggressive localization and expansion drive in India. There are close to 250 Japanese component makers already operating in India, according to the Auto Component Manufacturers Association (Acma)—a number that is set to swell by 35-40% over the next five years as Japanese parts makers boost investments in the Indian market, said analysts and investment bankers. Since Prime Minister Narendra Modi’s recent visit to Japan, the nation’s automobile industry has been making serious attempts to grow their India business, said R.C. Bhargava, chairman of India’s top car maker Maruti Suzuki India Ltd. 

Parent Suzuki Motor paved the way for investments by suppliers from Japan when it first entered the market in collaboration with the Indian government in 1982. At least 80-100 suppliers will be entering India for setting up units for making parts for Toyota Kirloskar Motor Pvt Ltd, said Shekar Viswanathan, vice chairman and whole-time director of Toyota Kirloskar Motor Pvt Ltd. Getting suppliers from Toyota’s global supply chain to set up manufacturing facilities in India, he said, is part of the company’s strategy to be able to launch future models with a higher proportion of locally produced parts. Viswanathan declined to identify any of these firms as they are in various stages of entering the market. “It would be an opportunity for them (Japanese auto part firms) not only to feed the local market, which is expected to expand at a fast pace after a decade’s worst slowdown, but also to use India as an export hub,” said Amit Kaushik, principal analyst at I.H.S Automotive, a market researcher. Kaushik estimates the Japanese supplier base will grow by at least a third over the next five years. The Japanese companies are showing a renewed interest in the auto ancillary space after a long time, said Anil Singhvi, founder and chairman at Ican Investment Advisors, a Mumbai-based investment banking firm. Besides the growth opportunity that India offers, the depreciating currency is an advantage for these firms, he said, adding that mergers and acquisitions in the space could also pick up. “I believe that transactions will increase in this space where Japanese players will look to take more control,” said Singhvi. If recent deals are any indication, the trend is already underway. On 25 September, Rico Auto Ltd informed the stock exchanges it has sold its Co. Ltd, stake in the joint venture FCC-Rico to its Japanese partner FCC allowing the Japanese company to take full control of the operations here. In March, Lumax Auto Technologies Ltd formed a joint venture with Mannoh Industrial Co. Ltd of Japan to make gear shift levers. Prior to this, Mannoh had only a technical alliance with Lumax. “They were keen to engage with the Indian market more deeply, hence we floated this new company in which Mannoh has 45% stake,” said Deepak Jain, managing director at Lumax Industries Ltd. Meanwhile, Jain’s firm is also in talks with two others Japanese firms for a joint venture in electronic and electrical parts. 

The deal, he said would be concluded in a few months. Minda Industries, the Delhi-based auto component maker, formed a joint venture with Panasonic Japan for making lead acid batteries for automotive and industrial applications, the company said earlier this month. Influx of component suppliers from Japan is leading to emergence of dedicated Japanese supplier parks in Gujarat, Karnataka and Tamil Nadu. These would be similar to the one in Neemrana in Rajasthan that came up a year and half back. 

Toyota’s Viswanathan said his company is in talks with the state government for a land parcel near Tumkur in Karnataka for auto component firms looking to set up shop to cater to Toyota’s needs. Gujarat Industrial Development Corp. (GIDC) has identified 115 hectares of land for drawing investment from Japanese companies, especially auto component makers, according to GIDC officials, who declined to be identified. Some of the companies that have been received approval to set up units in the industrial park include MA Extrusion India Pvt. Ltd, Toyota Forms India Pvt. Ltd, ROKI Minda Co. Pvt. Ltd and TS Tech Co. Ltd. “These companies plan to manufacture parts including automobile seats, air cleaner, pre-cast concrete forms, etc,” an official from GIDC said, declining to be identified. Some of the other firms which are setting up plants in the region include Hitachi Hi Rel Electronics, Mitsui Kinzoku Components Ltd and Showa India Ltd. The firms will be catering to the requirements of Suzuki Motor, Honda and others that announced their expansion plans earlier this year. In January, Suzuki said it would invest Rs.3,000 crore in a plant in Gujarat and sell the cars it produces there to Maruti Suzuki. With an annual capacity of 1.5 million units, the plant will start production in 2017. In February, Honda Motorcycle and Scooter India Pvt. Ltd (HMSI), also announced plans to set up a 1.2 million per annum capacity scooter factory in Gujarat. In August, Honda Cars India Ltd too announced plans to build a third factory with a 240,000 units per annum capacity, in Gujarat.

India, Japan to sign advance-pricing agreement to untie tax hassles

Das, however, did not name the Japanese company signing the APA. He said it augurs well for investors from Japan who are looking at India.

NEW DELHI: India and Japan will soon sign an advance-pricing agreement (APA), a move that will provide certainty to investors at a time the country is looking to attract big Japanese investment.

"I am happy to mention here that APA between India and Japan in a particular company's case has been finalised and it would be inked very soon," revenue secretary Shaktikanta Das said at an event on Thursday. "So, this will bring lot of clarity between our tax perception and the activity of that particular company. And the agreement is between tax authorities of India and Japan."

Das, however, did not name the Japanese company signing the APA. He said it augurs well for investors from Japan who are looking at India following a very successful visit there by PM Narendra Modi. The government has so far received more than 378 applications from companies for the mechanism, which will allow MNCs to seek guidance on pricing of goods and services in advance.

An APA, usually for five years, is signed between a taxpayer and the tax authority (CBDT) on an appropriate transfer pricing methodology for determining the price and ensuing taxes on intra-group overseas transactions.

Transfer pricing — transaction prices between separate entities of a large company — generated much heat in connection with investments by large MNCs like Vodafone, Shell, WNS and Nokia.

MNCs are often accused of misusing the system to transfer profits to their subsidiaries in countries that have low tax rates. The law requires that goods and services be sold to subsidiaries by parent companies at arm's length price, the price at which goods are traded between unconnected companies.

Taxing these units has become a complex area for the revenue department, with the government often disagreeing on the profits declared by a foreign company for its Indian unit.

Das said the government is committed to providing "fair, stable and predictable" tax regime that does not have any room for ambiguity and the Budget 2014-15 is a starting point.

"Lot of predictability has been brought in with this budget," he said, adding that the government has clearly said there will be no retrospective change in the tax policy that creates fresh tax liability. But, he said, it has to be a partnership between the industry and the revenue department.

"We need to move away from aggressive tax planning vis-a-vis aggressive tax assessment. We need to find resolution.

The whole perception of aggressive taxation is centred around 7-8 cases. I would not like to go into those cases as they are in various stages in different courts," he said.  

Foreign investments worth $100 bn knocking at India’s doors: Modi Industry Ministry sets up ‘Japan Plus’ team to fast track investments

Signalling a massive dose of FDI in manufacturing, Prime Minister Narendra Modi today said $100 billion worth of foreign investments is headed India’s way and it is up to the states to take advantage of the inflow.

"$100 billion investments from Japan, China and America have applied for visa. Now it is turn of the states to capitalise on the opportunity. The roads are wide open. The states which are ready can walk away with major share," he said while inaugurating the Global Investors' Summit in Indore.
The Prime Minister added that the Centre would stand shoulder to shoulder with all states, irrespective of political affiliation of the state government, to facilitate investment and economic growth.

Following the announcement by the Prime Minister on his Japan visit, the Department of Industrial Policy & Promotion (DIPP) today announced it has set up a special management team to facilitate and fast track investment proposals from Japan. The team, known as “Japan Plus”, will comprise representatives from the government and METI (Ministry of Economy, Trade and Industry) and Government of Japan.

An outcome of the recently concluded visit of the Prime Minister of India to Japan, the mandate of the “Japan Plus” team runs through the entire spectrum of investment promotion – research, outreach, promotion, facilitation and aftercare.

The team will support the Government of India in initiating, attracting, facilitating, fast tracking and handholding Japanese investments across sectors. The team will also be responsible for providing updated information on investment opportunities across sectors, in specific projects and in industrial corridors in particular. In addition, the “Japan Plus” team will identify prospective Japanese companies, including, Small and Medium Enterprises (SMEs) and facilitate their investments in India.

The government has also constituted a core group chaired by Cabinet Secretary on India-Japan Investment Promotion Partnership.


During the recent visit of the Prime Minister to Japan, the India–Japan Investment Promotion Partnership, as part of the Tokyo Declaration for India – Japan Special Strategic and Global Partnership was announced. Under this Investment Promotion Partnership, Japan has offered to invest in India approximately 3.5 trillion Yen ($33.5 billion) by way of public and private investment and financing, including Overseas Development Assistance, over the next five years.

$1.65-bn SAR aircraft deal likely to take off during Modi’s Japan visit

A pending deal involving purchase of 15 ShinMaywa US-2i Amphibious and Rescue (SAR) aircraft for $1.65 billion is likely to be sealed when Prime Minister Narendra Modi visits Japan shortly.

 

A pending deal involving purchase of 15 ShinMaywa US-2i Amphibious and Rescue (SAR) aircraft for $1.65 billion is likely to be sealed when Prime Minister Narendra Modi visits Japan shortly.
MoD sources said in march, a delegation of senior officials, including from the Navy, visited the facilities where the amphibious aircraft is being produced. They also sought to iron out issues related to modifications "that would allow Japan to export the aircraft to India without violating its self-imposed defence export restrictions".

A friend-or-foe identification system will be removed from the aircraft, a defence official said. Both countries had, at that time, also discussed the possibility of India being permitted to assemble the aircraft indigenously, giving it access to Japanese military technology. The deal was put on hold because of general election in India.

"The deal is significant for a variety of reasons. On the surface, it’s another indicator of growing cooperation between India and Japan on security matters. The deal is doubly significant in the context of India’s relations with Japan because once India clinches the deal, it will become the first country to purchase defence equipment from Japan since the latter’s self-imposed ban on defence exports began in 1967. The deal is important for Abe as it would open up Japan's defence industry for additional contracts with foreign partners,” said diplomatic sources.

Modi is expected to visit Tokyo enroute the BRICS summit in July, where he will meet with his counterpart, Shinzo Abe.
According to Japanese officials, the proposed sale of ShinMaywa US-2i amphibious, fixed-wing aircraft would not infringe on Japan's self-imposed ban on arms exports because the aircraft to be given to India will be unarmed and can be used for civilian purposes. The plane, built by ShinMaywa Industries (7224.T), could be outfitted for firefighting or as a kind of amphibious hospital and costs an estimated $110 million per unit. The plan is to deliver two aircraft and, then, assemble the rest of the planes with an Indian partner.

The Navy had issued requests for information on amphibian planes in 2010 to ShinMaywa, Canada's Bombardier for CL-415 platform, Russia's Beriev for Be-200 and US/German company Dornier for Seastar CD2. The Navy is also interested in Japanese patrol vessels and electronic warfare equipment as Tokyo moves further on easing its ban on military exports, the officials said.