Monday, 10 March 2014

TWENTY YEARS AGO TODAY

Japanese await more financial reforms
India is emerging as a good investment market for Japan and it is likely that the Japanese will pump in more funds here in the near future, according to Mr. Erne Yamashita, Chairman of the Japan-India Business Cooperation Committee (JIBCC). “The most important issue now is to explain and sometimes convince the Japanese that this is the right time to invest in India,” Mr. Yamashita, the leader of the Japanese delegation, told newspersons.
Damania's permit suspended
The air taxi operator (ATO) permit for Damania Airways has been suspended by the Director-General of Civil Aviation, citing safety violations. It has been prohibited from operating its flights for a month from March. The action has been initiated under Rule 19 (3) of Aircraft Rules, 1937- Damania Airways has been directed under Rule 19 (5) to submit its ATO permit to the DGCA office for necessary endorsement. The suspension order is valid for one month or till such time as they take positive steps and institutionalise a system to the satisfaction of DGCA.
Mixed reaction to new SEBI formula
Reactions to the renewal of the carry forward system by the Securities and Exchange Board of India met with mixed reactions. While welcoming SEBI’s decision to remove the ban on badla, most brokers are not clear on the ‘modus operandi’ of the proposed changes. Mr. M. G. Damani, President of the BSE Brokers’ Forum, commented that unless SEBI had sent them the letter detailing the manner in which the new proposals would unwind itself, there would be difficulty in implementing them. For example, SEBI had said that short sellers would have to obtain shares to effectdelivery. Presently, the practice of lending shares did not exist on the bourses.

Sunday, 9 March 2014

Assessing Japan-India Relations: A Japanese Perspective – Analysis

Since the Japanese Prime Minister Yoshiro Mori visited New Delhi in August 2000, Japan-India relations have changed dramatically. While only four Japanese Prime Ministers visited India from 1957 till 1999, six Japanese Prime Ministers and over forty other ministers have visited India since 2000. Remarkably, beyond mere economic or cultural cooperation, the two governments have also enlarged bilateral activities in the domain of security. In October 2008, Indian Prime Minister Dr Manmohan Singh and Japanese Prime Minister Taro Aso signed the ‘Joint Declaration on Security Cooperation between Japan and India’. Tokyo and New Delhi also held the Subcabinet/Senior Officials-level 2 plus 2 dialogues in July 2010 and October 2012. In July 2012, the first Japan-India naval exercise ‘JIMEX 12’ was held in the Bay of Sagami, followed by the second ‘JIMEX’ in the Bay of Bengal in December 2013. Although there is no doubt that the rise of China is one of the push factors for this honeymoon between Tokyo and New Delhi, it should not be forgetten that this would have not happened without the reform of Japan’s security policy and the expansion its Japan Self-Defense Forces (SDF)’ sphere of activities. By focusing only on the China factor, what Tokyo expects from Japan-India security cooperation will be misunderstood.
After World War II, Japan adhered to the Yoshida Doctrine, which relied upon the American security guarantee, permitting the country to have a minimal defense capability and to concentrate on economic development. Article 9 of the Japanese Constitution, which bans Japan from using its military forces, has been a convinent excuse to avoid such burdens. The trigger for the drastic change in Japanese security policy was the Persian Gulf War in 1991. Minesweepers were dispatched to the Persian Gulf in April 1991; this was the first overseas operation of the SDF. Since then, the SDF has participated in over thirty peace-keeping and humanitarian missions and a number of bilateral/multilateral joint excercises. The security cooperation between New Delhi and Tokyo can be seen as a continuation of this activism and expansion of the SDF.
The same school of Japanese strategic thought seems to have promoted the activism of SDF and Japan-India security cooperation. According to Mike Mochizuki, there are four schools of strategic thought in Japan: political realist, unarmed neutralist, Japanese gaullist, and military realist. The differences between political realism and military realism are the motives and approaches to expand the SDF’s activities. The political realists are concerned with the political and diplomatic implications of Japan’s security policy, so they stress that Japan’s contribution to international security should be commensurate with its economic strength. On the other hand, the military realists promote a strategy that would address the most likely military threat and advocate closer military cooperation between Japan and the US. They differ from the Gaullists which are call for an independent policy from Washington.
Although the expansion of the SDF’s capability and sphere of activities is often seen as the rise of Japanese gaullism, the mainstream of Japanese politics is still political realism which is not comfortable with a rapid military rise. However, due to North Korean missile and nuclear developments, Chinese assertive actions and some other domestic issues such as the Tokyo Metro Sarin gas terror attack, military realism is gradually catching up with political realism today. It could be concluded that the military realists, such as Prime Minister Shinzo Abe, are promoting the SDF’s overseas activities and security cooperation with India. Political realists were reluctant to accept the opinions of military realists who insist that Japan should take more responsibility to contribute to international security, and hope that this will enhance the US-Japan alliance.
While military realists believe that Japan still needs the US to meet its military threats, they also find merit in the Japan-India security cooperation. First, it enhances the US-Japan alliance in a multi-layered way. Second, it provides Tokyo the ability to show Washington that it has other options. Third, bilateral exercises with India will help the SDF (especially the Maritime Self-Defense Force) officers to gather more expertise. Fourth, it will also help to increase Japanese diplomatic influence to dispatch the SDF abroad. Although military realists do not expect that the MSDF will fight with the Indian Navy against China in the near future, they tend to emphasise the achievements of the Japan-India security cooperation to cover the SDF’s limitations.
Japan cannot rely upon the US-Japan alliance forever, Indian strategists might say. However, the Japanese political mainstream is still populated by political realists who believe that the US-Japan alliance could be enough to counter military threats. The more China builds up its military capability and acts aggressively, the more military realists will rise. Although they will not abandon the alliance, military realists have been trying to adjust Japanese capability both militarily and legally in light of the evolving security environment. When the time comes, military realists will strengthen and utilise India-Japan strategic ties more flexibly.

Saturday, 8 March 2014

Japan's Aeon denies Indian retail JV talks, Carrefour silent

* India's Bharti in talks with Carrefour, Aeon for retail JV - report
* Aeon denies report Carrefour, Bharti silent
* New retail JV would replace similar Bharti tie-up with Wal-Mart- report

By Dominique Vidalon and Ritsuko Shimizu

Japanese retailer Aeon denied a newspaper report that it was in talks with India's Bharti Group to set up a retail joint venture in India, while France's Carrefour declined to comment on whether it was also talking to Bharti.

India's Economic Times said earlier on Friday that Bharti Group was in talks with Carrefour and Aeon to set up a joint venture with one of them after the collapse of a similar venture with the world's largest retailer, Wal-Mart, last year.

"This is not the case," an Aeon spokesman told Reuters, when asked about the report.
Both Carrefour and Bharti declined to comment.
"Discussions with Carrefour were at an advanced stage. However, the talks were put on hold due to the entry of Japanese retailer Aeon," the Indian paper cited one of two sources familiar with the negotiations as saying.

"Some of the senior officials of Bharti Retail are in favour of tying up with the French major as it has an existing footprint in India's cash and carry space that would be a perfect match for Bharti Retail," the source added.
Bharti - which is also the parent of Bharti Airtel India's biggest mobile phone carrier - and Wal-Mart broke up their six-year-old joint cash and carry venture in October 2013.
The move left Bharti to find another deep-pocketed partner to support its retail expansion

Carrefour, which has five cash and carry stores in India, would fold this business unit into a joint venture with Bharti, the Economic Times said.
Carrefour would also invest in back-end support and commercial real estate companies owned by Bharti, it added.

Commenting on his plans for India at Carrefour's 2013 earnings conference earlier this week, Chief Executive Georges Plassat told investors: "We are currently thinking about
India. We have a small business in India, it does not bring any losses or gains but the true challenge is to know how we tackle India for the next 20 years."
Describing India as "a very complex, very challenging country", Plassat said Carrefour would not expand there "on our own anyway".

Global foreign firms have long been frustrated in their efforts to set up shop in India due to complex and restrictive retail legislation.
In late 2012, the government of Prime Minister Manmohan Singh opened India's $500 billion retail industry to foreign operators, allowing companies such as Wal-Mart and Tesco to own majority stakes in Indian chains for the first time. However, India left it up to individual states to decide whether or not to allow foreign retailers.
So far, fewer than half of India's 28 states have adopted the policy, making it harder for retailers to exploit economies of scale by setting up sourcing and cold storage networks that could serve stores in neighbouring states.

Polls show that India's main opposition party Bharatiya Janata Party (BJP) is on track to win the most seats nationally in elections due by May.
The BJP is considered to be more investor-friendly than India's ruling Congress party but opposes foreign direct investment in supermarkets because of its impact on small shopkeepers. It unseated Congress in Rajasthan's state elections in December.

BJP Leader Narendra Modi's Bromance With Japan's Shinzo Abe

If the prime minister of Japan, Shinzo Abe, could vote in India’s upcoming elections, he would surely cast a ballot for Narendra Modi, the prime ministerial candidate for India’s right-wing opposition Bharatiya Janata Party (BJP). Abe and Modi are not only fellow nationalist, hawkish conservatives, but also long-time friends with shared views on many issues and could help each other greatly in the years to come. 

ForeignPolicy.com reported that when Abe was elected to a second term as Japan’s prime minister in a landslide in late 2012 (he previously held the top job from 2006-2007), one of the first foreign dignitaries to congratulate him was none other than Modi, the chief minister of the Indian state of Gujarat, not the leader of a sovereign nation.

Shrey Verma of ForeignPolicy.com noted that a phone conversation between the Japanese prime minister and the Gujarat chief minister was rather “odd by strict standards of protocol,” but underscored how the “personal relationship between the two men and the economic partnership between Japan and Gujarat has thrived over the years.”

Verma noted that in the wake of the deadly communal riots that swept through Gujarat in 2002 and killed about 1,200 people (a tragedy many blamed on Modi for not using his authority to prevent, or at least control), the U.S. and some western countries turned their backs on Modi, prompting his provincial legislature to “look east” for trade opportunities, especially Japan. Modi himself journeyed to Japan in 2007 (the first such official visit there by an Indian chief minister), an event that opened up new investment conduits between Gujarat and Tokyo. During that trip, Modi met with Abe, other cabinet ministers, as well as many of Japan’s most powerful industrial and banking executives.

Ever since, Verma said, Gujarat has attracted significant foreign investments from Japan for infrastructure projects, and new automobile plants, among other ventures. In 2012, almost 120 Japanese investors visited Gujarat to discuss future financial deals and investments in the province. For example, Japan's Suzuki Motor Corp. will invest $488 million for a car factory in Gujarat, which is expected to be operational by 2017. By 2015-2016, private Japanese investment in Gujarat is expected to reach $2 billion. (For the whole of India, Japan reportedly plans to spend billions of dollars on infrastructure projects.)

Thus, Japanese diplomatic and trade delegations have consistently treated Modi like a cabinet member or even head of state, not just the chief minister of a state, suggesting an ever-closer relationship between Modi and Japan’s power structure. Now, in the spring of 2014, with polls predicting that Modi’s BJP will defeat the incumbent Congress Party, thereby elevating Modi to the top position, the warm relationship between India and Japan is likely to strengthen even further, a bulwark against not only China’s looming dominance in Asia, but also the United States, which has “pivoted” much of its military presence towards the Asia-Pacific region.

But Abe also enjoyed friendly ties with the outgoing Indian prime minister, Manmohan Singh, of Congress. The Economic Times reported that Abe admires Singh, considering him a “mentor.” Under Singh’s two terms and 10 years in office, India and Japan formed closer strategic ties, as their greatest mutual rival on the Asian continent, China, has grown in economic and military power. Indeed, aside from Russia, Japan is the only other country on earth that India holds annual summits with. New Delhi and Tokyo have also firmed up energy partnerships, defense programs, maritime security arrangements and economic investments.

Leaders from both countries have exchanged high-profile visits in recent years. In fact, even when Abe was the leader of the Japanese opposition in 2011, he visited New Delhi to confer with Singh. Even Japanese Emperor Akihito and Empress Michiko made a historic visit to India late last year [their first trip there in fifty years], while Abe attended India’s Republic Day celebration in January 2014 in New Delhi as an honored guest. Now, with Modi waiting in the wings in New Delhi, Abe is very well positioned to embrace India even deeper.

As relations between China and Japan continue to sour – over territorial and maritime disputes, over North Korea, over China’s stridently militaristic stance, among many other issues -- an India led by Modi could serve to further rankle the leaders in Beijing. Consider that India invited Japan to participate in the U.S.-India Malabar Naval exercises scheduled for later this year. Already, in recent months, the Japanese and Indian Coast Guards conducted joint exercises off the coast of Kochi in southwestern India, while the Japan Maritime Self-Defense Force and the Indian Navy performed their second bilateral exercise off the coast of Chennai in southeastern India. ForeignPolicy.com also noted that India is considering buying military aircraft from Japan for $1.65 billion – which would make India the first country since World War II to make such a purchase from the North Asian power.

India and China also have their own territorial disputes along their 2,500-mile border, including imbroglios over Kashmir and Arunachal Pradesh. But it is well worth remembering that Modi has not rejected China – indeed, he visited China in 2011 (at a time when the west, especially the U.S., was closed off to him) and he was received like a visiting head of state. Modi, for his part, also invited Chinese investments in Gujarat, as he had similarly extended such entreaties to Japan.

However, despite Modi's appeals for Chinese investments in India, he has expressed his strident opposition to China's expansionist policies in no uncertain terms. The Financial Times reported that Modi warned China to shelve its “expansionist attitude” during a recent speech in Arunachal Pradesh, a Himalayan state that neighboring China claims as its own (and which Beijing refers to as “South Tibet”). “No power on earth can take away even an inch from India,” he said a rally in the town of Pasighat while attired in native garb. “I swear by this land that I will not let this nation [India] be destroyed, I will not let this nation be divided, I will not let this nation bow down.”

Sanjaya Baru, director for geo-economics and strategy at International Institute for Strategic Studies and honorary senior fellow at the Centre for Policy Research in New Delhi, wrote in the Indian Express that if Modi is elected prime minister, he will, like his Japanese counterpart, follow a more nationalist foreign policy, partly to revive the “national mood in a dispirited country.” 

“Modi seems to recognize the value of Abe’s combination of investing in domestic economic capability and external strategic capacity for nation-building,” Baru noted. “Modi’s domestic policy focus, drawing from Gujarat’s experience, has been on building India’s economic capability. His political rhetoric focuses on the need to revitalize a moribund economy, which is exactly how Abe came to power in a depressed and depressing Japan.” Now, both Abe and the next-would-be Indian leader Modi, might need a third Asian partner to counter China. 

The prominent Indian political analyst Jaswant Singh has proposed that India, Japan as well as South Korea could form a three-pronged cooperative security front to challenge China. Writing in Gulf News, Singh, a former Indian finance minister, foreign minister and defense minister, noted that South Korean President Park Geun-hye and Japan's Abe were both alarmed by China's “unilateral declaration last November of a new Air Defense Identification Zone, which overlaps about 1,158 square miles of South Korea’s own ADIZ, in the Sea of Japan,” prompting a move to upgrade defense and security links (including joint cooperation deals on nuclear energy) with India on China's southern flank.

In January of this year, Japanese Defense Minister Itsunori Onodera conferred with Indian defense officials for four days to hammer out specifics of a bilateral security arrangement to “strengthen the strategic and global partnership between Japan and India,” including regular joint-combat exercises and military exchanges to cooperation in anti-piracy, maritime security and counter-terrorism.”

Michael Kugelman, senior program associate for South and Southeast Asia at the Woodrow Wilson International Center for Scholars in Washington, commented that the India-Japan relationship is arguably one of the most cordial partnerships in Asia. “The two countries have grown particularly close in the last few years, as both have become increasingly concerned with China's rising influence in Asia,” he said. “Concern about China, in fact, is probably the chief reason why Tokyo and Delhi are so close.”
But Modi must also focus on India's sluggish economy, and here again Japan could come to the rescue. Bilateral trade between Asia's two largest democracies is ripe for expansion. In 2011-2012 such volume amounted to only $18.4 billion, versus $65.5 billion in India-China trade (in 2013) and an astounding $329 billion in annual trade between erstwhile “enemies” China and Japan last year. Indeed, some 90,000 Japanese companies are now based in China, versus less than 2,000 in India, according to the Free Press Journal. Consequently, the potential for India-Japan trade is huge. Kugelman noted the “very strong economic dimension” to the blossoming India-Japan relationship. “And as a businessman, this is something that a Prime Minister Modi would want to build on,” he said.

However, in the event that Modi wins the election, he will likely face bigger challenges than his apparent ally in Tokyo who gained a dominant mandate in the 2012 elections in Japan. As Andy Mukherjee explained in Reuters, Abe's Liberal Democratic Party now controls both houses of parliament in Tokyo, while Modi's BJP (if it win the elections) are unlikely to gain a decisive majority in the Delhi parliament, which would lead to the formation of coalition partnerships that would dilute the potency of Modi's domestic and foreign policy measures. But, Mukherjee noted, Modi could find some help from Abe. “Japanese businesses, banks and pension funds want to invest, but Japanese society is too old to utilize many new investments,” he wrote. “The solution might be to invest more in India, which has a young population and desperately needs infrastructure.”

Friday, 7 March 2014

Sun Pharma keen to enter Japan's generics market

Sun Pharmaceutical Industries Ltd, India's biggest drugmaker by market value, is looking for partnerships or acquisitions to enter , an especially lucrative market for manufacturers of low-cost drugs, a senior executive said.

Politicians are lobbying for more generic drugs to go on sale in Japan to bring down healthcare costs for a rapidly ageing population.

Indian pharmaceutical firms are the world's biggest manufacturers of , but Ltd is the only Indian drugmaker that has so far made significant inroads in Japan.
"At an intent level, we would like to participate in the Japanese generic market. But we are still thinking through as to what's the best way to participate," Uday Baldota, senior vice president for finance and accounts at Sun, told Reuters.
"It could be a partnership, or an acquisition. We haven't really narrowed down the specific way of doing it."

Mumbai-based Sun gets more than half its sales from the United States, the world's biggest pharmaceuticals market.
Sun has expanded in the last few years, mainly through acquisitions, and Baldota said the company was on the look out for more purchases. He declined to give details, however.
"We will do acquisitions and remain keen to do acquisitions, but it's not necessary for us to do an acquisition just to grow our business," Baldota said. "We feel comfortable doing large deals. That is not something that will deter us."

Sun was said to be in talks last year to buy speciality drugmaker Aptalis from private equity firm TPG Capital. In January, Forest Laboratories Inc agreed to buy Aptalis for $2.9 billion.

Sun's talks in the same year to buy Swedish drugmaker Meda , a maker of speciality products, over-the-counter drugs and branded generics, foundered on valuation, sources with direct knowledge had told Reuters.

In 2012, Sun bought US-based Dusa Pharmaceuticals Inc for about $230 million, as well as URL Pharma from Japan's Takeda Pharmaceutical Co for an undisclosed amount - boosting its growth and market share in the United States.

Sun also sought to take full control of its US-listed Israeli unit Taro Pharmaceutical Industries Ltd , but the deal was terminated last year after a long-drawn battle.

Thursday, 6 March 2014

Toyota records one million vehicle sales in India

Toyota Kirloskar Motor Pvt Ltd (TKM), the Indian arm of Toyota Motor Corporation, Japan, recorded one million vehicle sales with the hand over of its Toyota Etios to a customer in Cochin.

"The sale of Toyota's one millionth car in India marks a very important milestone for us. Since its inception, Toyota has been present in the MPV/SUV segment in India and we have been market leaders ever since in these segments. It is only in 2011 that we forayed into the mass segment with the Etios & Liva and still have been able to realize this milestone in such a short duration," said N Raja, senior VP, TKM.

Since its establishment in India in 1997, Toyota has grown many folds. This growth has significantly been in the form of increased localization in products, enhanced network of dealers and supplier partners, increased dealership outlets across India, and a phased capacity expansion of up to 3, 10,000 units.

Tuesday, 4 March 2014

India, Japan to set up lab to promote research

India and Japan today signed an agreement for setting up a laboratory to focus on research in health sciences, medicine and agriculture.

While the two countries established a joint research laboratory--DBT-AIST International Laboratory for Advanced Biomedicine (DAILAB)-- in Japan in 2003, the new lab will come up in India to give a further boost to scientific collaboration, said chairman of the Indian Scientists Association in Japan Sunil Kaul.

"Now, we are trying to make a parallel kind of sister laboratory in India to have easy exchange of personnel from India to Japan and Japan to India and do the same thing together or complement each other. We would like to encourage more students, researchers to come to India and vice versa," he said.

Secretary in the Department of Biotechnology Vijay Raghavan said the engagement today reflects a very deep understanding and friendship in the scientific sphere between India and Japan.

The lab to be set up would focus on bio-imaging research through advanced microscope, a key component in health science and biology research.

The partners in the initiative include the National Institute of Advanced Industrial Science and Technology of Japan and Regional Centre for Biotechnology under the Department of Biotechnology.