Japan asks Prime Minister Narendra Modi to clear policy hurdles for companies.

NEW DELHI: Japan, the fourth largest foreign investor in India, has sought Prime Minister Narendra Modi's intervention to clear policy hurdles faced by some of its companies and fast-tracking of a few projects that it is backing in the country.

Japanese ambassador to India Takeshi Yagi recently raised the matter in a letter to the prime minister, mentioning companies including Eisai Pharma, Mitsubishi, Honda and Toyota that faced some issues in India.

The prime minister's office has asked the departments concerned to look into the matter, a government official said on the condition of anonymity, adding, "There are a number of policy related issues that have been raised.

Mainly they are to do with tax-related concerns. Views from various departments are being compiled to sort these out to the best ability, which will help improve the bilateral ties and investment."

Japan has also raised these issues separately with the ministries of finance and commerce. For instance, drugmaker Eisai Pharma, which has invested $50 million in India for a manufacturing unit in Vizag special economic zone or SEZ, has put its expansion plans on hold due to the minimum alternate tax announced in the 2011 budget.

The original scheme provided for a complete tax holiday to SEZs. The government had in 2011-12 budget imposed minimum alternate tax at 18.5% on the book profits of these developers and units located inside.

Such units were also levied a dividend distribution tax of 10%. Japan also raised the tax issues affecting its automakers Mitsubishi and Honda which are faced with a demand of $2 billion and $600 million respectively.

Toyota, on the other hand, has been facing labour unrest that hit production at its plant in Bidadi, about 30 km from Bangalore. The company had to hire 1,000 contract workers to restart production after its employees refused to return to work.

The Japanese ambassador had last month met the department of industrial policy and promotion secretary Amitabh Kant to discuss future course of investment plans in India's industrial corridors to begin with.

Source : economictimes.indiatimes.com