Japan should leverage India's expertise in IT and financial sector outsourcing, besides seeking to set up SEZs in the South Asian nation for third country exports, a policy group has suggested the Japanese government.
Like their western counterparts, Japanese firms should leverage India's outsourcing prowess or they could end up losing international competitiveness, the Japan Forum on International Relations said in its report -- India's Leap Forward and Japan.
"Instead of coddling their affiliated IT companies and client hardware companies, Japanese financial institutions should develop open IT systems and outsource some of their business to Indian software-related companies," said the 29th policy recommendations by the policy group.
It also called for Japanese manufacturers to forget their concerns on intellectual property rights related to its hardware technologies.
During the former Japanese Prime Minister Shinzo Abe's India visit in August, both the countries had committed to enhance bilateral trade to 20 billion dollars by 2010 from 8.5 billion dollars in 2006.
Calling for the better use of SEZs, the group said it would help in expanding exports from India. According to the report, the promising areas of investment in India include general and industrial machinery, processed foods, chemical products, pharmaceuticals, retail markets, real estate, sanitary goods and cosmetics.
"The current pattern of investment -- almost exclusively in the transportation equipment sector -- must be abandoned if Japan-India business relationship is to grow," it noted.
Interestingly, the group recommends that concentrating investment only in the Delhi region would end up as a poor strategy especially in the wake of rising land costs, difficulty in acquiring industrial land as also the Capital's great distance from ocean harbours.
The report, endorsed by over 100 business leaders, politicians and academics, has been submitted to the Japanese government.
Applauding India's expertise, the report points out that Indian firms' awareness of intellectual property rights exceeds that of Chinese enterprises apart from high English communication skills.
However, the group underlines need for Indian firms to expand knowledge of Japanese language and business practices.
The group further noted that Japanese trade missions to India should present better perspectives of Japanese corporations and not "simply ask the Indian government to improve the investment climate."
This would "create the counterproductive impression among Indian officials that Japanese people only go there (India) to complain," the group advises even as it cites issues like poor infrastructure and labour problems stymieing investments.
The group has asked Japanese financial institutions to make investments in the infrastructure bonds of Indian counterparts. The growing infrastructure needs would benefit Japanese corporations operating in India, it points out.
Regarding business models for India, the report calls for manufacturing products that "fit local circumstances". Increasing the number of India specialists in government offices, corporations, universities and research institutes would partially help in bringing down language barriers.
Moreover, the group has recommended to increase the number of Indian students in Japan and vice-versa, to strengthen bilateral ties.