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Business News/ Politics / Policy/  India will continue to be one of Japan’s biggest partners: Akihiko Tanaka
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India will continue to be one of Japan’s biggest partners: Akihiko Tanaka

Japan International Cooperation Agency president says ties will be boosted under Modi government

Japan International Cooperation Agency (Jica) president Akihiko Tanaka. Photo: Ramesh Pathania/MintPremium
Japan International Cooperation Agency (Jica) president Akihiko Tanaka. Photo: Ramesh Pathania/Mint

New Delhi: Akihiko Tanaka, president of the Japan International Cooperation Agency (Jica), says India’s relations with the island nation will get a boost under the new administration under Prime Minister Narendra Modi. The agency is keen to expand its development assistance in areas of sanitation and river development in addition to the existing sectors of infrastructure it is already engaged in, Tanaka said in an interview. He hopes that the Indian government would undertake further deregulation, change the system of taxation, and improve the process of authorization to create a better investment climate. Edited excerpts:

What is your view on the change in administration in India and what do you think it means for India-Japan bilateral relations?

India has been one of the most important partner country over many years. In fact, Japan’s first ODA (official development assistance) loan was extended to India in 1958. Jica has had a constructive and productive relations with India for many years, but I think the coming of the administration under Prime Minister Narendra Modi is quite significant in the sense that his first visit to Japan was really a boost to expand the relations between the two countries in general. In the backdrop of such boosting atmosphere, we believe that Jica will be able to play a more productive role in creating necessary environment for further development in India and creating the basis of friendship in India.

The new National Democratic Alliance government has emphasized its keenness to improve the ease of doing business in India, which is currently rated very low at 142 by the World Bank. Would you say there is some change under the new administration in this regard?

To many prospective investors, Prime Minister Modi’s initiative is creating better investment climate. In particular the special unit called Japan Plus, created under DIPP (department of industrial policy and promotion) for the consultation with prospective Japanese investors and to guide and facilitate the business opportunities for Japanese investors is very welcome. This I think is a very constructive move for which Prime Minister Shinzo Abe expressed his appreciation to Prime Minister Modi when they met on the margins of the G20 (Group of Twenty) summit.

The leadership under Mr Modi is very constructive and encouraging. But still from the perspective of Japanese investors, it would be easier if further deregulation (is undertaken) and the system of taxation and process of authorization is improved. If these things should become more streamlined and flexible, the investment atmosphere becomes much better. But we are hopeful that these reforms would be implemented under the strong leadership of PM Modi.

Has Jica finalized a $3 billion funding plan for the current financial year, as you had earlier indicated?

We are in discussion with the Indian government. We don’t have any indicative figures for the current fiscal yet. But considering the figures of 3.5 trillion japanese yen over the next five years indicated by Prime Minister Abe in the joint statement which consists of both private and public investment, we recognize that JICA will play a sizeable role to cover part of that amount.

We would make our efforts that a strong component of the 3.5 trillion yen would be covered by our ODA loans. The yearly numbers will depend on the prospective projects, which projects we can finance depending on the preparedness of the projects. It depends on the requests we get from the Indian government. The 300 billion Japanese yen that we extended to India last year is among the largest extended to a recipient partner country from us.

Would you say that India is likely to remain the largest recipient of your development assistance?

I think in the foreseeable future, India will continue to be one of the biggest partners of Japan.

Will the recession in the Japanese economy impact the development assistance to India?

Currently, the Japanese economy is at crossroads between getting back to deflation period or getting back to steady and sustainable growth. There’s a prospect that the Japanese economy will be able to achieve steady growth under the leadership of PM Abe. Part of the reason he dissolved the Parliament to have general election in December is to pose a question to the public, whether the public would continue to support his economic policy. So the PM believes that the continuation of economic policy called Abenomics is going to boost the Japanese economy.

And then one of the important factors for improving the Japanese economy is the prospect of improving international business of Japanese companies and so making profitable investment in such countries like India is going to be very important for the Japanese economy, too. So I think Japan and India are in a mutually beneficial relation. The influx of Japanese investment in India will improve the Indian economy and that success in India will improve the Japanese economy.

What are new opportunities of investment that you see coming up under the new government?

An area related to the policy of Prime Minister (Modi), which is Clean India and Ganga rejuvenation. But these are still being discussed within the Indian government and we are waiting for a concrete policy or proposal from the government side. The other area is sanitation; the Prime Minister declared getting rid of open defecation by 2019, which is very challenging too, but we are ready to work with the government towards this long-term goal.

The bullet train project is at the stage of feasibility study. Once the government decides to apply the Japanese technology, we are very much willing to support this project

Can you talk about your approach of working with state governments in India?

We are talking to each of the state governments about increasing the transport system like infrastructure projects in urban areas of Bangalore, Chennai. We have already started a state-of-the-art intelligent transport system in Ahmedabad. It is a pilot project and if it goes well, then we are ready to expand. Now we are exploring the possibilities if we could finance the Ahmedabad Metro.

One other new approach was represented by the recently agreed ODA loan with the state of Tamil Nadu, a programme loan to the local government. It is not connected with a single or particular project. This loan to the state government is expected to be used for infrastructure development as well as improvement of investment climate in the state. We would like to explore if similar programme loans could be provided to some other states.

Are you satisfied with the progress of projects Jica is engaged with in India?

Our experience of working with the Indian government has been productive, but obviously it would be better if we could expedite the projects and so together with the government of India we would like to make efforts so that our projects are implemented as quickly as possible. The Dedicated Freight Corridor’s progress is well though not quite well, but compared to other infrastructure projects, progress it is almost on track.

Sometimes Jica and Japan are also criticized for slow decision-making process, but we make our efforts to quicken our process, too. We are hopeful we will deliver results in the projects we are engaged with. Currently, there are 70 ODA loan projects all over the country. Some of them are on track, some of them slightly delayed. But with the cooperation of the Indian government we will make all our projects bear fruit.

Are you interested in expanding your cooperation in a particular sector?

Our policy is to align with the national development plan as much as possible. We respect the national development plan and so if it emphasizes investment by private sector in a certain area and public investment in another sector, we will provide in that area. But because it is a bilateral cooperation, we will plan to contribute in the area where Japan is more capable for bringing about better results. If the area if more suitable for Japanese knowhow and technology and knowledge, then we will opt for that area. So alignment with the national plan is the first area and second is within that framework we would like to contribute using Japanese human resources, Japanese knowledge and Japanese technology.

Many Jica loans have a clause of a percentage of sourcing from Japanese companies. However, as has been seen in the case of the Dedicated Freight Corridor (DFC), not enough Japanese companies participate in the bids. What are you doing to address this?

There are many technologies that Japanese companies can offer. In principle, we believe competition is a necessary component of any bidding. In the process of DFC’s bidding procedures, we encourage Japanese companies to participate. Under the current circumstances, necessary competition is secure in various components and package. But then in the future projects, too, we would like to make the schemes in such a manner so as to secure necessary competition.

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Published: 27 Nov 2014, 12:34 AM IST
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