On his first visit to India, Japans minister of state for science and technology policy Motegi Toshimitsu told newspersons, Next week, the two nations (India and Japan) will sign an agreement to strengthen bilateral relations especially in IT. The two countries can have a complementary relationship. India is strong in software and Japan in technology (hardware).
He indicated that Japan could be a base for Indian software companies to cater to the Asian market. Mr Toshimitsu, who is in New Delhi with his delegation of government officials, also called on the minister of communications and IT Dayanidhi Maran. Japanese IT companies are interested in setting up base in India and growth of IT in India is natural, Mr Toshimitsu said.
Japan is betting high on China as well for software opportunities. When asked to compare Japans preference between India and China, he said, India is more sophisticated while China is more competitive. In terms of investments, Japan will definitely look at investing more in China as compared to India.
Japan is also looking at other countries besides India and China and these include Vietnam, Indonesia and Philippines. More than the infrastructure problem, India lags because of government and bureaucratic inefficiencies. There are regulatory barriers to do business, he said.
Reciprocating the sentiments, Mr Maran stressed the need for strengthening the bilateral cooperation by integrating each others strengths in the fields of hardware and software. He also mentioned about the potential for Indian IT products in the Japanese market.
Both agreed to work out the modalities for setting up a joint study group which would be tasked to identify the areas of cooperation for enhancing the bilateral cooperation between the two countries in the IT sector. Mr Maran also discussed the issue of withholding tax with his counterpart and suggested exemption for software exports from India.
The IT services market in Japan is estimated at $60 billion per year. Approximately $3 billion is outsourced from abroad. Out of this $3 billion, Indian IT companies have a market of $190 million per year.
The progress of Indian IT companies has been slow, even though 70 Indian IT companies have established themselves in Japan. The Japanese market currently accounts for about 3 per cent of Indian global IT services exports.