While the Indian government is bullish on the $90-billion Delhi-Mumbai Industrial Corridor (DMIC), to be built with financial and technical assistance from the Japanese government, Japanese companies are still maintaining a wait-and-watch stand. On the sidelines of the Nikkei Global Eco-Business Forum in New Delhi, Masaki Ida, chief director general of the Japan External Trade Organization, told Nayanima Basu there were still several challenges facing the project. Excerpts:
The memorandum of understanding to build this mega infrastructure project, DMIC, was signed in 2006, yet there has been no visible progress so far. Are you still keen on the project?
The project has just entered the implementation phase and may be in the next 5-6 months each project detail would be announced. Maybe after that some Japanese company will come to take part in that project. Right now, everyone is just watching. The DMIC project is big and too huge, so sometimes it is too big to see the whole thing. Therefore, for some companies it is too huge an investment, so they are thinking twice before jumping into it. But, nonetheless, they are very interested in the project. So, I think if one company takes part in the project, others would follow.
Is it the global financial crisis which probably made the Japanese government and industry a bit shaky to invest in the project? When do you think the project would actually take off and have you set any deadline?
DMIC is, right now, in the stage of conception. So, I don’t think much investment has happened from the Japanese side, which is true. Under DMIC, there are many projects happening, of which some are in the advanced stage, while some are in the planning stage. So, it won’t be easy to put a deadline to the whole project, but I think it would take another five-six years at least before the project gets completed. Moreover, challenges are there but the Japanese government is strongly supporting the project.
What sort of challenges are you talking about?
The challenges are in terms of acquisition of land, financing, risk-taking and another problem is the PPP (public-private partnership) method. PPP is not a very familiar model to the Japanese companies. But we are looking at tie-ups for this model and for financing.
Are we going to see some big names investing in the project from your side?
Right now, no Japanese companies are participating in the project. As I said, it is now in the conceptual stage and only consulting work is being done by some European companies. Japanese companies are interested in this, but they are watching the conceptual-level work.
India and Japan have just agreed to sign a comprehensive economic partnership agreement (Cepa). Do you think it would boost bilateral trade and how many lines would you finally offer for tariff reduction?
The details of the CEPA are not open yet but I know that with the signing of the agreement the Japanese government’s attitude towards India would be changed. Japanese investment would accelerate with the signing of the CEPA. For most Japanese companies, India is one of the most attractive destinations. At present, the bilateral trade is not much, but after signing the agreement it would certainly increase the volume of trade and volume of investment. In the next 10 years, we plan to reduce the tariffs in most products to zero.
