New Delhi: Japanese ambassador to India Kenji Hiramatsu has sought tax relief for hybrid and electric cars in the 2018 budget which he says would be an incentive for foreign auto makers. In an interview ahead of the arrival of an 80-member business delegation from the Japan Chamber of Commerce and Industry (JCCI), Hiramatsu also called for the easing of rules on external commercial borrowings which he said would boost infrastructure development, expected to be a key focus of the 2018 budget. Edited excerpts:
A delegation from JCCI is expected to visit Delhi. Could you give some details?
JCCI is the biggest chamber of commerce in Japan. It comprises 515 local chambers of commerce and members include big companies and small and medium enterprises (SMEs). Japan’s economic success has been spurred by SMEs. JCCI is characterized by a strong presence of SMEs. So from here, an 80-member delegation is coming, from 21-24 January. The delegation is headed by chairperson Akio Nimura, the former head of Nippon Steel and Sumitomo Metal Corp. Many members of the delegation are from SMEs. The last visit by the chairperson of JCCI was six years ago. The mission’s visit is very significant—there are meetings with their counterparts and senior Indian government officials. The Japan-India relationship is growing very fast, so this (trade) mission is an important one. The visit follows from Prime Minister Shinzo Abe’s visit to India in September and is part of our ongoing efforts to bring more companies to India to invest, especially SMEs. Many big companies are already here but we have to get more SMEs interested in the Indian market.
Which sectors do members of the delegation represent?
They represent automobile, retail, food processing, textiles, logistics, transportation and service industries. Interest in India is growing. So it is not only traditional sectors like automobile and steel but also wide ranging-areas which include retail and food, among others.
There are some 2,000 Japanese firms in India. What is the percentage of SMEs among them?
The big companies operating in India are around 70-80% (of a total of about 2,000 Japanese firms). So it means 20-30% are SMEs. In case of China, 65% are big companies which means 35% are SMEs. In case of Asean (Association of South-East Asian Nations), it (number of big Japanese firms operating) is 54%. In case of India, ...there is a lot of potential for more SMEs to come in. This is why this mission is very important to draw the attention of SMEs of Japan. Many states of India have shown a lot of interest inviting companies including SMEs from Japan, providing space for them in industrial zones and incentives. SMEs are small, so they need support from local governments and they want to be together with other Japanese companies. In the case of Neemrana industrial town in Rajasthan, there are some 46 Japanese companies already there. Many of them are SMEs. I hope other state governments will provide us a venue, infrastructure and incentives.
India has recently improved its position in the ease of doing business rankings. Practically, is it easier to do business in India now? We also have the annual budget coming up, so what are your expectations?
I welcome India’s ranking going up. I see the difference in the area of development of infrastructure, in terms of reform measures taken, in terms of reduction in administrative difficulties. I also think many Japanese people have seen the difference, especially under PM (Narendra) Modi. But we hope to see more reform coming and more improvement in infrastructure. Electricity is very important for us. So I will be very happy to see in this next budget that the focus will be on the development of infrastructure. That will be a good sign for foreign investors. We hope some more tax issues will be addressed. We welcome GST (goods and services tax) but we hope some tax issues will be addressed.
What are the areas under taxation in which you would be looking at reliefs?
We hope there will be some more cuts in tax rates under GST. We are saying that with regard to automobile issues, we would welcome a reduction in the rate for electric cars, but we hope attention will be given to import of hybrid cars, too. If some tax incentive can be provided to hybrid cars, too. Also, we are hoping some measures on foreign currency restrictions including external commercial borrowings. I hope there will be measures taken to support more borrowing in foreign currency that will facilitate more infrastructure development. We also hope the dividend distribution tax issue will be addressed to some extent. That is an ongoing request not only from us but also others.