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Japan IT

Japan should use India’s outsourcing capabilities

Japan should harness India ‘s skills in IT and financial outsourcing, as well as aiming to set up SEZs for third-country exports in the South Asian nation, a policy committee proposed by the Japanese government.

Like their western peers, Japanese companies could exploit India’s outsourcing expertise or end up lacking foreign competitiveness, said the Japan Council on International Affairs 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. – Hindustantimes

It also called on Japanese producers to disregard their complaints over intellectual property rights relevant to their hardware technologies. 

During the visit of former Japanese Prime Minister Shinzo Abe to India in August, both countries agreed to rising bilateral trade to $20 billion by 2010 from $8.5 billion 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 investment areas in India include general and industrial machinery, processed food, 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 . – Hindustantimes 

Interestingly, the group advises that the concentrate of investment only in the Delhi area ends up as a bad strategy, particularly in the face of increasing land prices, difficulties in acquiring industrial property, as well as the capital ‘s long distance from ocean ports. 

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The research, supported by more than 100 corporate executives, policymakers and scholars, was sent to the Government of Japan.

Appreciating India’s expertise, the report points out that Indian firms’ awareness of intellectual property rights exceeds that of Chinese firms, apart from the high level of English communication skills. 

Nevertheless, the organization underlines the need for Indian companies to extend their knowledge of Japanese language and market 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.” – Hindustantimes

This would “create the counterproductive impression among Indian officials that Japanese people only go there (India) to complain,” The organization frequently reports on topics such as weak facilities and labour concerns impacting production. – Hindustantimes

The party requested Japanese financial institutions to participate in the infrastructure bonds of Indian counterparts. Improved infrastructure requirements would support Japanese companies operating in India, he points out. 

Regarding business models for India, the report calls for manufacturing products that “fit local circumstances”. Increasing the number of Indian experts in government departments, companies, colleges and academic organizations will partially help to eliminate language barriers. 

In turn, the group suggested an rise in the number of Indian students in Japan, and vice versa, a strengthening of bilateral relations.