India pips Japan, becomes world's third largest economy in terms of PPP

China is set to overtake the US as the world's number one economy, while India has jumped into third place ahead of Japan, according to a new study from the world's leading statistical agencies.
The 2011 International Comparison Program (ICP), which involves the World Bank, assesses economies based on purchasing power parity (PPP), an estimate of the real living costs. The results revealed on Wednesday paint a new and different picture of the global economy compared with the last update in 2005. 

The research puts China's GDP (gross domestic product) at 87 percent of the US in 2011 and says the Chinese and Indian economies have more than doubled relative to that of the US. In the 2005 study, the ICP believed China's economy was less than half the size of the US, at 43 percent. 

According to the study China is all set to overtake US as the world's number one economy.

"The United States remained the world's largest economy, but it was closely followed by China when measured using PPPs. India was now the world's third largest economy, moving ahead of Japan," the report said. 

It added: "The results indicate that only a small number of economies have the greatest shares of world GDP. However, the shares of large economies such as China and India have more than doubled relative to that of the United States."
The ICP program is the largest global statistical operation, covering 199 economies from eight regions. It said that changes to its methodology help explain the estimates for the size of China's economy. 

Rapid growth has led many economists to anticipate that China, the world's second biggest economy, would move into the number one position over the next few years. The latest findings from the ICP could fuel a debate on whether that is likely to happen sooner rather than later.
The Financial Times used the ICP figures to predict that China could overtake the US as the world's largest economy as soon as this year - at least five years earlier than previously forecast. 

Reliable?
Because economies estimate their GDP at national price levels and in national currencies, those GDPs are not comparable, the ICP said. To be compared, they must be valued at a common price level and expressed in a common currency, the ICP said, explaining why it uses PPPs.
"The ICP is quite well-known and my take on this is that purchasing power parity measures are quite tricky to undertake and a lot of assumptions go into them," said Frederic Neumann, the co-head of Asia economic research, at HSBC in Hong Kong.
"It is true that China and India are certainly very large in size," Neumann added. "At the same time these [PPP] measures shouldn't be the be-all and end-all of international comparisons. When, for example, we measure international purchasing power expressed in dollars, which matters in international trade, the U.S., Europe and Japan continue to be the dominate economies in the world." 

China's economy grew an annual 7.4 percent in the first quarter of this year, slowing from a 7.7 percent increase in the final quarter of 2013. Still, its economic growth continues to outpace that of developed world economies.
An advanced reading due for release later on Wednesday is expected to show the US economy expanded an annual 1.2 percent in the first three months of this year.
The findings of the ICP report meanwhile might come as welcome news in India, an economy that came under heavy fire last year for not doing more to address a wide-current account deficit and implement long-term structural reforms.
India was the tenth largest world economy in the 2005 ICP study. 

The 2011 report lists the world's 10 biggest economies in the following order: U.S., China, India, Japan, Germany, Russia, Brazil, France, the U.K., and Indonesia. The ICP noted that changes in its methodology and country coverage made comparisons with the previous results difficult.
"This study is a useful reminder of how rapid really the progress has been in China and India and that the domestic economies are larger than first meets the eye," said HSBC's Neumann.

Asia Oceania Junior girls tennis: India beats Japan, tops group

The Indian girls’ fairytale performance continued as they topped group ‘D’ with a superb 2-1 victory over Japan in the Asia Oceania World Junior under-14 girls’ tennis tournament at the DLTA Complex here on Wednesday.

Shivani Ingle saved two breakpoints to avoid going down 0-5 in the decider before pulling the carpet from under Yuki Ando’s feet for a 6-4, 3-6, 7-5 victory. The nerve-wracking three-hour duel put India 1-0 ahead.

In an equally fascinating contest, Sathwika Sama recovered from 0-3 in both sets to beat the Japanese No.1 Ayumi Miyamamoto 6-3, 6-4 as India took an unbeatable 2-0 lead.

Captain Ankita Bhambri — who had driven home the point that it was important to play to potential rather than be intimidated by the quality of opponent’s game — opted to conserve the energy of the Indian girls for the crucial quarterfinals against Kazakhstan and the team conceded the doubles rubber. The victory against Japan was crucial as it meant that India avoided facing top seed Australia — which has dropped only 14 games in nine matches, while winning 108 games in 18 sets — in the quarterfinals.

Though they adopted a patient approach, looping the balls in and the top-spin often taking the ball beyond the reach of the Japanese, both Shivani and Sathwika played with refreshing assurance and punch, handling every variation the Japanese girls tried.

So, Japan is now left with the unenviable task of facing the Aussies for a qualification berth to the World Group competition to be staged in the Czech Republic in August.

In other quarterfinals, China will play New Zealand and Hong Kong will be up against Chinese Taipei.

The results (league):

Group-A: Australia bt Kazakhstan 3-0; Uzbekistan bt Turkmenistan 3-0.

Group-B: Chinese Taipei bt New Zealand 3-0; Korea bt Singapore 3-0.

Group-C: India bt Japan 2-1 [Shivani Ingle bt Yuki Ando 6-4, 3-6, 7-5; Sathwika Sama bt Ayumi Miyamoto 6-4, 6-4; Aarja Chakraborty & Sathwika Sama lost to Auri Nagata & Ayumi Miyamoto w.o.].

Indonesia bt Kyrgyzstan 3-0 [Faiza Salssaliba Nurhidayati bt Ermeka Nurgazieva 6-1, 6-0; Shevita Aulana bt Eliza Askarova 6-2, 6-3; Fitriani Sabatini & Faiza Salsaliba Nurhidayati bt Eliza Askarova & Ermeka Nurgazieva 4-6, 7-6(7), 6-3].

FDI inflows from Japan slowing amid government's inaction

Japan is widely acknowledged to be, currently, India's major business partner. Three decades ago, it used to be Germany. That was when Germans were making huge investments in India. All its major companies – like Siemens, Bayer, Mico-Bosch, BASF and DaimlerBenz – had impressive expansion plans in India. Then two things happened. Germany got united, and the EU got created, and Germans began looking at the markets there. Second, India ceased to be as attractive as was promised.

But the '80s saw the emergence of Japan as a major investor in India. Maruti Udyog (later Maruti-Suzuki) was the trigger – thanks to the patronage it received from Indira Gandhi, the late prime minister of India. Her son's disastrous investment in an automobile plant in 1971 had to be bailed out. Suzuki took over the driver's seat in 1981. But Japan quickly moved beyond political patronage. With excellent manufacturing capabilities and models, Maruti-Suzuki became a super-hit. Soon, Japan forged collaborations with Indian entrepreneurs for making almost all automobile components – right from steering-wheels to shock-absorbers. Other auto giants followed – like Honda, Mazda, Mitsubishi and Toyota.

Ten years ago, management gurus like Kenichi Ohmae were predicting more companies from Japan setting up base in India. He provided three reasons: First, Japan's population was ageing rapidly. It needed bases in countries where it could benefit from a younger population to man its manufacturing units.
Second, India was a large market, where Japanese investments had already begun generating good returns. Growth in the West had begun to plateau. Third, anti-Japan xenophobia in China had made it cautious about making large investments there. India was a better option.

Ohmae's predictions proved right. The Dedicated Freight Corridor (DFC) promises to be one of the biggest investments by Japan in India, though through a soft ODA loan. Bigger than that will be the Delhi-Mumbai-Industrial-Corridor (DMIC), with investments of over $120 billion. It may see the sprouting of 24 world-class cities as well.
Today there are 1,072 Japanese establishments and companies in India. Figures from Maharashtra and Gujarat show that Japanese companies interested in India keeps climbing, year-on-year. But FDI inflows have sagged. From a peak of $2 billion in 2011-12, Japan's FDI into India, says the Reserve Bank of India (RBI) slipped to $1.3 billion in 2012-13. Singapore and the Netherlands raced ahead of Japan.
Even data from Japan's Jetro show that while Japan's investments into China did not slow down, FDI into India skidded from a peak of over $5 billion in 2008 to just $2.8 billion in 2012. Something was amiss.

One major reason could be the current government's inability to deliver. For instance, even a full year after Indian Railways (IR)invited bids for the Rs2,000-crore Vadodara-Sachin segment of the DFC, deadlines for placing bids were extended five times. Now, contrary to the original agreement signed, IR wants the finance ministry to renegotiate the terms of the tied loan for the DFC from JICA (Japan International Cooperation Agency) so that non-Japanese bidders can participate.

The new land regulations will make the development of the DMIC that much more complex, if not impossible. Except for Gujarat, where the government moved quickly to allocate land for the proposed Dholera city, most of the other cities will take a long time in coming up, because the process of acquiring land has been made that much more complex and terribly expensive. More than benefitting farmers, the new laws could favour powerful interests who have already grabbed huge land-banks, close to where the proposed development is to take place.

On its part, JICA has promised to finalise its financing commitment of $3 billion after the new government takes over. It has also offered to consider higher outlays if the "absorbing capacity of the Indian side is much stronger". That "absorbing capacity" will means speedier decision-making, a focus on implementation, meeting deadlines, and a commitment to growth. These are attributes that have not been much in evidence during the past five years.

India should allow Japan to set up war memorials in the Northeast

On a recent visit to Japan, my wife and I went to the Yasukuni shrine in Tokyo, where the mortal remains of Japan’s war dead are interred. The shrine is often in the news because every time a key Japanese politician visits it, a storm of protest erupts in Beijing, where the shrine is viewed as the symbol of Japanese militarism.

At the shrine, I pointed out to Vinita the elegant little shrine to Justice Pal, the Indian judge on the War Crimes Tribunal, whose famous dissenting judgements earned him the undying admiration of the Japanese.

Every Buddhist temple in Kyoto, Nara and Kamakura, the ancient capitals of Japan, contain references to India and evidence of Indian influence, on art, philosophy and life in Japan. These reflect the enormous “soft power” India enjoys in Japan.

From defeat to victory
When I worked in Manipur in 1978-80, I visited the beautiful war cemeteries for the Allied war dead in Imphal, maintained by the Commonwealth War Graves Commission. These were landscaped, manicured, impeccably laid out oases in the midst of a sprawling and noisy city, reflecting the respect and affection with which the thousands of Allied soldiers from Britain have been buried and are still remembered thousands of miles from home.

Field Marshall Slim’s gripping narrative of the war in Burma, Defeat Into Victory, describes the battles fought in this less known theatre of war between powerful armies, with thousands of casualties on both sides. The Imperial Japanese Army was finally halted at the famous battle of the DC’s Tennis Court at Kohima.

That ended the westward thrust of the Japanese, and Kohima and Imphal are forever etched in the memories of all Japanese. I recall hearing of a request from Japan to set up war cemeteries to honour the Japanese war dead being turned down by the Indian Government, and not being able to understand such a decision. Was it a case of the government taking sides in a war long over, and one in which Indians fought with heroism on both sides? 

The INA that fought alongside the Japanese Army hoisted the Indian tricolour for the first time on Indian soil at Moirang, near Imphal, and a tablet there commemorates it. And here was the Government turning down a reasonable request from Japan, 30 years after the war! The Japanese side had even apparently offered to underwrite investments needed for development of the North East.

Links to the past
Today, the world is a very different place. The normally ambivalent foreign policy mandarins in South Block seem to have realised that India’s interests lie in strengthening relations with Japan, in the face of the growing power of China. The US as global hegemon can no longer police the neighbourhood, it’s resources being already stretched in the Middle East, if not in Europe to deter Russia. 

India could play the NE card adroitly, and allow the Japanese to honour their war dead in a manner they see fit. This gesture would fetch India many brownie points, including the possibility of investment in the North East in roads, power projects, bridges and inland waterways. The North East would then dramatically emerge from years of neglect.

It would not be unrealistic to envisage a network of highways and roads knitting together the cities of SW and W China, Myanmar, Laos, Vietnam, Kampuchea, Malaysia, Bangladesh, Nepal, Bhutan, and the NE region of India. 

(The writer is a former IAS officer turned entrepreneur, and author of ‘On a clear day you can see India’)

Omron Corporation opens automation centre in Mumbai

Japan's Omron Corporation has opened its fifth automation centre (ATC) in Mumbai in India.

The company's other automation centres are located in Japan, US, China and Spain.

Omron said opening of the automaton centre in India is part of its 'Asia Hotspots' strategy.

"One of its important tasks is to consolidate our foothold in India which is indeed a highly promising market for Omron Automation," the company said in a statement.

Commenting on the development, Omron Asia Pacific Pte Ltd MD Industrial Automation Business Takehito Maeda said: "India continues to be an important destination for Omron Automation. It shall play a very important role in strengthening our contribution towards India's manufacturing prowess and the society."

"We are confident of achieving relevant traction in many industries through this initiative such as packaging, food and beverages, FMCG, pharmaceuticals, special purpose machines, automotive and textile," Omron Automation India MD Sameer Gandhi said.

The centre has on display Omron's key portfolio of industrial automation range as well as the technical and application support capabilities, the company said.

India, Japan to hold trade talks

Foreign Secretary Sujatha Singh will travel to Tokyo tomorrow to hold consultations with Japanese Vice-Foreign Minister Akitaka Saiki on bilateral, regional and international issues. 

The Foreign Secretary will also hold discussions with counterparts in the Japanese Ministry of Defence, Ministry of Economy, Trade and Industry and Japan International Cooperation Agency during her two-day visit, a External Affairs Ministry release said on Tuesday.

TCS‚ Mitsubishi team up

India's biggest outsourcing firm Tata Consultancy Services (TCS) and Japan's Mitsubishi Corp said Monday they are teaming up to create a Japanese software services provider with annual revenues of $600 million.

Tata Consultancy Services Japan, Nippon TCS Solution Center and IT Frontier Corp — a Mitsubishi unit — will merge to create the provider under the agreement slated to close in June.

"This strategic transaction signifies our serious commitment to the Japan market," TCS Chief Executive N Chandrasekaran said in a joint statement with Mitsubishi.

TCS Japan will initially hold a 51 per cent stake in the new company while Mitsubishi Corp will hold 49 per cent. TCS Japan will have an option to raise its holding later.

India, Japan meeting on amphibious aircraft deal in Tokyo

India will discuss procurement of the Japanese US-2 amphibious aircraft during the working-level meeting between the two sides in Tokyo on Wednesday.

The meeting comes soon after Japan removed its self-imposed ban on exporting defence equipment to other countries.

India and Japan have been discussing the sale of these aircraft for quite some time now but the talks were held up as Japan was expressing unwillingness to sell defence equipment along with the planes, defence officials said here.

The first meeting of the Joint Working Group was held in December in India on the proposed sale of the amphibious aircraft required by the Navy to look after its island territories in Andaman and Nicobar and Lakshadweep.

As per Japan's new policy on defence equipment sale, it will prohibit the export of weapons to countries involved in conflicts.

With restrict screening, Japan will allow arms exports only if they serve the purpose of contributing to international cooperation and its security interests, according to the new rule.

Now, Honda Cars scouts Gujarat for new plant site

Japan-headquartered Honda Cars India might set up its plant in in the country in Gujarat, sources said. This follows two-wheeler maker Honda Motorcycle and Scooter India (HMSI) setting up a plant in the state.  
A senior government official close to the development said, “It (Honda Cars) is looking for a 250-acre land parcel and has already visited a site in Vithalapur. However, at the moment, the company wishes to keep things under wraps.”  


A Honda Car senior official denied to comment on the matter.  
Vithalapur is about a few kilometres from Hansalpur, where Maruti Suzuki India’s plant is proposed. Maruti Suzuki has also bought a plot in Vithalapur for expansion in the future.
The area, about 110 km from Ahmedabad, lies between Sanand and Mehsana towns. In the same region, HMSI has bought about 200 acres of private land at Rs 15-20 lakh an acre.
The two-wheeler maker is likely to sign a state support agreement with the state government, which has been delayed due to the coming Lok Sabha elections.
Recently, Honda Cars India started manufacturing passenger cars at its Tapukara plant in Rajasthan’s Alwar district; the facility is spread over 450 acres.
Cumulatively, the company has invested Rs 3,526 crore (Rs 35.26 billion)n the Rajasthan unit.

The unit started phase-I operations in 2008, with a press shop and power train shop for engine components.
In February this year, the unit started making vehicles. Initially, it is running at a capacity of 60,000 vehicles a year, working in a single shift. The plant has an installed capacity of 120,000 cars a year.