The Second India-Japan Strategic Dialogue on Economic Issues was held in Tokyo yesterday between an Indian delegation led by Dr. D. Subbarao, Finance Secretary and Mr. M.Kohno, Deputy Minister, Ministry of Foreign Affairs of Japan. The dialogue focused on Japanese support for two flagship infrastructure projects : (i) Delhi-Mumbai Dedicated Freight Corridor; and (ii) Delhi-Mumbai Industrial Corridor. Japanese support for the new IIT coming up at Hyderabad as well as collaboration in information and technology and basic science research were the other items of the agenda. This dialogue assumes significance as it sets the agenda for the visit of Prime Minister Manmohan Singh to Japan in October, 2008.
The Indian delegation comprised, apart from the Finance Secretary, H.K.Singh, Indian Ambassador to Japan, Sanjay Krishna, Joint Secretary in the Ministry of Finance and R.Ramanujam, Minister(Economic) in the Indian Embassy.
Separately, Dr. Subbarao, Finance Secretary addressed a Roundtable Conference of a select group of Japanese businessmen, industrialists, bankers and financial analysts. The Finance Secretary said that Japanese investment in India, although sizeable, is still far short of the potential of Japan to invest or the capacity of India to absorb. India, he said, offers a huge market with a growing middle class and rising incomes, and, hence, very rewarding investment opportunities, particularly in the infrastructure sectors. There is need to exploit the natural complementarities between India and Japan and increase Japanese engagement in India to the mutual advantage of both countries.
The Finance Secretary expressed optimism that the India growth story is still credible and intact. India clocked an annual growth of 8.9% on a compound average basis over the last five years. India's growth is based on strong fundamentals and the current expansion is not a one off episode. Growth this year could, of course, moderate because of pressures of inflation and the global down turn.
Responding to whether India could decouple from the rest of the world, the Finance Secretary said that in a rapidly globalizing world, it is not possible for any country to 'decouple' from the global developments. If any large economy could, in fact, decouple, it is India. This is because India's growth draws largely from domestic demand and investment unlike a number of other fast growing Asian economies. However, even India is impacted by the global down turn through the trade and credit channels. Also, India is dependent on imports for oil and is a price taker in the world market, and is impacted by the rising crude prices.
Questions from Japanese businessmen centered around bridging the infrastructure deficit, streamlining the tax structure, skill development and the pace of reforms especially in insurance and foreign investment. Dr. Subbarao responded by saying that reforms are a continuous process, that the Indian track record on reform implementation is credible and that second generation reforms inevitably take time to implement, especially in a democratic and decentralized system. Several Japanese businessmen, already invested in India, have spoken of their happy experience of investing in India and of the skill and productivity levels in India. The Japanese side attached importance to early conclusion of the ongoing of Composite Economic Partnership Agreement (CEPA). The Japanese side also noted that while large business houses have the capacity to do pre-investment research, there is need to set up systems for facilitating investment by SMEs.
The Finance Secretary said that the inflationary pressures at the global level will subside when the supply response takes effect over the next few months.
The Indian delegation comprised, apart from the Finance Secretary, H.K.Singh, Indian Ambassador to Japan, Sanjay Krishna, Joint Secretary in the Ministry of Finance and R.Ramanujam, Minister(Economic) in the Indian Embassy.
Separately, Dr. Subbarao, Finance Secretary addressed a Roundtable Conference of a select group of Japanese businessmen, industrialists, bankers and financial analysts. The Finance Secretary said that Japanese investment in India, although sizeable, is still far short of the potential of Japan to invest or the capacity of India to absorb. India, he said, offers a huge market with a growing middle class and rising incomes, and, hence, very rewarding investment opportunities, particularly in the infrastructure sectors. There is need to exploit the natural complementarities between India and Japan and increase Japanese engagement in India to the mutual advantage of both countries.
The Finance Secretary expressed optimism that the India growth story is still credible and intact. India clocked an annual growth of 8.9% on a compound average basis over the last five years. India's growth is based on strong fundamentals and the current expansion is not a one off episode. Growth this year could, of course, moderate because of pressures of inflation and the global down turn.
Responding to whether India could decouple from the rest of the world, the Finance Secretary said that in a rapidly globalizing world, it is not possible for any country to 'decouple' from the global developments. If any large economy could, in fact, decouple, it is India. This is because India's growth draws largely from domestic demand and investment unlike a number of other fast growing Asian economies. However, even India is impacted by the global down turn through the trade and credit channels. Also, India is dependent on imports for oil and is a price taker in the world market, and is impacted by the rising crude prices.
Questions from Japanese businessmen centered around bridging the infrastructure deficit, streamlining the tax structure, skill development and the pace of reforms especially in insurance and foreign investment. Dr. Subbarao responded by saying that reforms are a continuous process, that the Indian track record on reform implementation is credible and that second generation reforms inevitably take time to implement, especially in a democratic and decentralized system. Several Japanese businessmen, already invested in India, have spoken of their happy experience of investing in India and of the skill and productivity levels in India. The Japanese side attached importance to early conclusion of the ongoing of Composite Economic Partnership Agreement (CEPA). The Japanese side also noted that while large business houses have the capacity to do pre-investment research, there is need to set up systems for facilitating investment by SMEs.
The Finance Secretary said that the inflationary pressures at the global level will subside when the supply response takes effect over the next few months.
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