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Indo Japan Trade and Investment Bulletin February 2014

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Information about Indo Japan Trade and Investment Bulletin February 2014
Business & Mgmt

Published on March 7, 2014

Author: corporateprofessionals

Source: slideshare.net

Description

INDO-JAPAN TRADE & INVESTMENT HIGHLIGHTS:
•Hitachi to Acquire 76% Stake in Indian IT Firm-Micro Clinic India
•India and Japan Signed MoU to Strengthen Tourism Sector
•Japan’s Outsourcing Inc Buys 51% Stake in India’s Alp Consulting for $5 million
•Japan’s Netprice looks to invest up to $4M in Indian tech startups in 2014
•India’s Ruchi Soya forms JV with Canada’s DJ Hendrick and Japan's KMDI for Specialty Soyabean Seeds
•Honda Motor Inaugurates Second Manufacturing Facility in India
•The Indian Economic Affair Committee Approves Acquisition of India’s Prizm Payment by Japan’s Hitachi
•India's Bajaj to Deepen its Partnership with Kawasaki, KTM to Enhance Exports
•Sakra World Hospital to Invest Rs. 300 crore for Super Specialty Centre in India
•Nissan Ends its Alliance with Hover Automotive in India
•Japan may Invest INR 15K crore on Road Projects in North-East India
•Japan's Shachihata to Expand India Operations
•Indian IT firm Inks Deal with Japan’s All Nippon Airways
• Japanese Companies Win Blast Furnace Project in India

KNOWLEDGE CENTRE : Termination of Employment in India
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Indo-Japan Trade & Investment Bulletin February Issue Japan Desk, Corporate Professionals 2014

INDEX Indo-Japan Trade & Investment Highlights Hitachi to Acquire 76% Stake in Indian IT Firm-Micro Clinic India India and Japan Signed MoU to Strengthen Tourism Sector Japan’s Outsourcing Inc Buys 51% Stake in India’s Alp Consulting for $5 million Japan’s Netprice looks to invest up to $4M in Indian tech startups in 2014 India’s Ruchi Soya forms JV with Canada’s DJ Hendrick and Japan's KMDI for Specialty Soyabean Seeds Honda Motor Inaugurates Second Manufacturing Facility in India The Indian Economic Affair Committee Approves Acquisition of India’s Prizm Payment by Japan’s Hitachi India's Bajaj to Deepen its Partnership with Kawasaki, KTM to Enhance Exports Sakra World Hospital to Invest Rs. 300 crore for Super Specialty Centre in India Nissan Ends its Alliance with Hover Automotive in India Japan may Invest INR 15K crore on Road Projects in North-East India Japan's Shachihata to Expand India Operations Indian IT firm Inks Deal with Japan’s All Nippon Airways Japanese Companies Win Blast Furnace Project in India Knowledge Centre Termination of Employment in India

Indo-Japan Trade & Investment Highlights Hitachi to Acquire 76% Stake in Indian IT Firm-Micro Clinic India Hitachi Systems Ltd. has signed a share purchase agreement with Delhi-based Micro Clinic India Pvt. Ltd. for acquiring 76 % in the Indian IT firm. Post-acquisition, the company will be renamed as Hitachi Systems Micro Clinic Pvt. Ltd. and both the companies will work with the Hitachi Group companies in India with the intent to expand their IT services business base in India. Hitachi commenced business in India in the 1930s. At present, Hitachi has around 30 business units and 7,500 employees in India. In addition to providing services in construction machinery and air-conditioning systems, the company is developing into information & telecommunication systems, power systems, industrial, transportation and urban development systems also. India and Japan Signed MoU to Strengthen Tourism Sector The ministries of tourism of the government of India and the Japan have signed a Memorandum of Understanding (MoU) for strengthening cooperation in the field of tourism. The main objective of the MoU is to expand bilateral cooperation in tourism sector for encouraging the citizens of both countries to travel and exchange information related to tourism. The MoU is expected to encourage cooperation between the tourism stakeholders in the two countries, including hotels and tour operators for promoting safe, honorable and sustainable tourism. Japan is a significant tourism generating source market for India especially because of the numerous sites of Buddhist heritage in India. Likewise, India has also emerged as an important source market for Japan. Considering the common benefits, MoU between India and Japan is predicted to create an institutional mechanism for promoting cooperation in the tourism sector. Japan’s Outsourcing Inc Buys 51% Stake in India’s Alp Consulting for $5 million Japan‟s Outsourcing Inc has bought 51 per cent equity stake in Alp Consulting, an Indian hiring firm based in Bangalore for $5 million. The acquisition is part of Outsourcing Inc‟s plans to strengthen its foothold in the rapidly growing employment market of India. The Japanese company decided to acquire 51 per cent of Alp Consulting and all shares of Datacore Technologies Pvt. Ltd, which is a subsidiary company of Alp Consulting. Outsourcing Inc said in a statement "By making the Alp Group a subsidiary, the company will enter the India market which is expected to continue developing going forward,”. With the acquisition of Alp Consulting, Outsourcing Inc is looking to meet the staffing needs of the Japanese companies which are aiming to enhance their presence in India.

Japan’s Netprice looks to invest up to $4M in Indian tech startups in 2014 Netprice.com Inc, Japanese internet incubation cum investment firm, is planning to step up its activity in India by investing in startups in the web and mobile space in the country. The Japanese firm is intending to put about $500,000 to $4 million in three-four Indian startup companies in the year 2014, as per a recent statement made by Netprice.com‟s president and CEO Teruhide Sato. However, the company did not clarify if it has already identified any Indian companies for investments. Recently, Beenos Asia Pte Ltd, a subsidiary of Netprice had also made investment announcement along with Japanese online payments firm Econtext Asia Ltd., in Citrus Payments Solutions, a Mumbai-based online payments company. India’s Ruchi Soya forms JV with Canada’s DJ Hendrick and Japan's KMDI for Specialty Soyabean Seeds Ruchi Soya Industries Ltd., one of the largest edible oil companies in India, has entered into a joint venture agreement with DJ Hendrick International Inc (DJHII), a Canadian firm and Japan‟s KMDI International for developing and commercializing specialty soybean seeds. In the joint venture, Ruchi Soya will hold 55 per cent stake, and DJHII and KMDI will hold 35 per cent stake and 10 per cent stake respectively. David Hendrick, chairman of DJHII said in a statement “We have vast experience in soy seed research and production of quality food which is rich in nutritional values. Our knowledge and know-how will be very helpful in developing and achieving the objectives of the joint venture". Currently, India is the world‟s fifth-largest producer of soybeans in the world. In 2013, Ruchi Soya formed a joint venture with two Japanese firms- Kagome and Mitsui for processed tomato products and another joint venture with two other Japanese firms for production and marketing of edible oils. Honda Motor Inaugurates Second Manufacturing Facility in India Japanese auto giant Honda Motor Company inaugurated its second manufacturing facility at Rajasthan, India for passenger vehicles with the view to double its annual capacity to 240,000 units per annum. With the inauguration of the second plant, Honda has aimed to double their production capacity in India. The second plant is part of the company‟s strategy to realise the target of selling 300,000 units in India by 2016-17. The company is planning to utilize the 450acre manufacturing facility to produce entry-level sedan Amaze and production of any other models will be decided later depending on market demand.

The Indian Economic Affair Committee Approves Acquisition of India’s Prizm Payment by Japan’s Hitachi The Cabinet Committee on Economic Affairs, India has permitted Hitachi Limited and its Indian arm, Hitachi Consulting Software Services India Pvt. Ltd. to acquire Prizm Payment Services Pvt. Ltd., a Chennai based payment service provider, for around Rs 1,540 crore 1. Prizm is a service provider of payment services using ATMs and POS systems to banks in India. The committee approved the proposal for acquisition of 100 per cent equity stake of Prizm Payment Service and the approval is expected to result in foreign investment of approximately Rs. 1,540 crore in India. Hitachi‟s move is aimed at expanding its business in the Indian financial sector. Hitachi (Japan) and Prizm Payment (India) are determined to utilize their respective business process integration skills in order to work toward a fine process of maintaining business momentum, for retaining personnel and enduring the best quality of customer support. India's Bajaj to Deepen its Partnership with Kawasaki, KTM to Enhance Exports Bajaj Auto, the Indian motorcycle manufacturer, is strengthening its partnerships with Japan's Kawasaki Heavy Industries Limited and Austria's KTM AG as it intends to increase exports of its motorcycles to accelerate growth. Bajaj Auto is planning to make use of its partnership with KTM, in which the company has a 48 percent stake, to enhance sales in the developed markets of United States, Europe, Japan and Australia. The company plans to sell its bikes in ASEAN, the regional grouping of Southeast Asian countries, and Brazil through Kawasaki, as the company already has a marketing agreement with Kawasaki to sell motorcycles in the Philippines and Indonesia and other markets where the company does not have its own sales network. Sakra World Hospital to Invest Rs. 300 crore for Super Specialty Centre in India Sakra World Hospital, the first-ever healthcare collaboration between India and Japan, has now come up in Bengaluru (India) at an investment of Rs.300 crore to set up a 300-bed multi-super specialty centre. The facility is a joint venture between Kirloskar India, Toyota Tsusho Japan and Secom Hospitals, Japan. The partners of this joint venture are working up to build a chain of multi-specialty hospitals across India. The hospital has the most excellent Japanese medical expertise and quality demanded by India‟s first-rate specialists. The hospital is expected to recover the capital invested within a period of just three years. 1 Crore = 10 Million

Nissan Ends its Alliance with Hover Automotive in India Japan‟s Nissan Motor Co. has ended its exclusive sales, marketing and distribution agreement with India‟s Hover Automotive India Pvt. Ltd., to distribute its vehicles in the South Asian country. The Japanese auto maker tied up with India‟s Hover in the year 2008 to sell its vehicles across India and for developing a network of dealers. But the company would now sell its own brand of vehicles in India directly through separate dealerships. The President of Nissan Motor India Pvt., Mr. Kenichiro Yomura, said that the company is "now at a point of maturity in India where the time is right to establish our own marketing and distribution operations." Nissan was so far the only company in India which didn't promote cars on its own. It announced in November last year that it would sell vehicles in India directly under the Datsun brand and not through the agreement with Hover. The company said that it would open separate showrooms for Datsun cars with its existing network of dealers in India. Japan may Invest INR 15K crore on Road Projects in North-East India As the Japanese investments in India are on a never before high, two of the Japanese agencies, Japan International Cooperation Agency (JICA) and Japan Bank for International Cooperation (JBIC), have started performing feasibility studies for more than a dozen highway projects in the North East region. The project estimated cost is about Rs. 15,000 crore. In August last year, an official from JICA had initiated a study to evaluate the status of the Indian regional transport infrastructure such as road, rail and port linkages in and around South and South-East Asia. Japan's Shachihata to Expand India Operations Artline (India) Pvt. Ltd., the Indian subsidiary of Japan‟s stationery manufacturing company, Shachihata Inc. has decided to expand production to target school and office segments. The company further stated its intentions of making India the new export hub for the group as the Indian stationery industry is growing at a healthy rate of over 10 percent and it is a significant market for Shachihata. One more Japanese stationery group, Kokuyo, bought controlling stakes in Indian company Camlin Ltd. last year. Indian IT firm Inks Deal with Japan’s All Nippon Airways One of Asia's major airline groups in terms of revenues, All Nippon Airways (ANA) has tied up with Indian IT firm for the implementation of two next-gen solutions for Vanilla Air, ANA Group's ne low cost carrier, for the purpose of managing its passenger reservations and flight operations.

Japanese Companies Win Blast Furnace Project in India Japan‟s Nippon Steel & Sumikin Engineering Co. (NSENGI) and Marubeni Corp. announced in February first week that they were jointly awarded a contract to do up a blast furnace in India. JSW Steel Ltd., one of India‟s major steel companies, had chosen the Japanese companies over European suppliers for the revamping project at its Dolvi Works Blast Furnace. This project will nearly double the furnace volume to increase production and will introduce „the revamping method‟ which will be performed for the first time in India and it is expected to shorten the shutdown period to less than 100 days and also minimize production loss. In the year 2010, Nippon Steel & Sumikin Engineering India was established as a subsidiary company by NSENGI in Kolkata, India with the intent to use it as its business hub for India. The company has since been promoting its business domestically in India. In addition to this project, NSENGI and its subsidiary have supplied a coke dry quenching facility to Tata Steel Ltd., India, JSW and Bhushan Steel Ltd., India.

Knowledge Center TERMINATION OF EMPLOYMENT IN INDIA Retrenchment of workers in the private sector is principally governed by the Industrial Disputes Act, 1947 (the “Act”) and the employment contracts. According to Section 2 (j) of the Act, it is applicable to any industry meaning any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen. The Act defines “Workman” as any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment are express or implied. However, important exceptions are2: (i) (ii) Workman employed mainly in a managerial or administrative capacity; or Workman, being employed in a supervisory capacity, draws wages exceeding Rupees ten thousand (Rs. 10,000) per month or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature. Under the prevailing laws in India, every industrial establishment that employs more than 100 workers is under mandatory obligation to seek permission from the government before it can proceed with lay-off3, retrenchment, or closure of undertaking. Any action by the employers to the contrary that results in job losses without seeking prior permission as prescribed under the act is illegal and workers are entitled to receive wages for the period of illegality. 4 However, an industrial establishment that employs less than 100 workers may retrench its surplus employees/workers in accordance with the provisions laid down under Section 25F, 25G & 25H of the Act without seeking permission of the government. Nonetheless, employees appointed for a fixed period under the contract of fixed term may be discharged from their services without complying with the provisions contained in Section 25F of the Act and his/her services may be terminated either on the ground of expiry of the fixed period or in stipulation of the provision contained therein. 2 See Section 2(s) of The Industrial Disputes Act, 1947 See Section 25M of The Industrial Disputes Act, 1947 4 See Section 25N (7) of The Industrial Disputes Act, 1947 3

Permitted Causes of Dismissal: 1. Inefficiency It is an accepted fact that businesses majorly operate with an objective of earning profits among various other motives. In such a scenario, it will not be feasible for any employer to retain an employee if he has been consistently inefficient and has failed to meet organizational targets. A contract of employment these days clearly establishes the job description and the expectations which the employee will have to fulfil. Therefore, where a worker‟s employment was terminated on the ground of her unsatisfactory work, the court held such reason to be a valid cause.5 2. Breach of Confidence or Misconduct Section 2 (oo) of the Act specifically excludes termination of a workman as a punishment inflicted by way of disciplinary action from the protection of the retrenchment under the Act. Therefore, any disciplinary action including for misconduct, breach of confidentiality or other vital requirements of rules of employment is allowed as a just cause for termination. The term misconduct is very subjective and therefore it is always recommended that the employer‟s human resource policy (rules of employment) comprehensively cover as to what conduct will tantamount to misconduct and eventually lead to termination of employment. Similarly, breach of confidentiality e.g. clientele details, technology details, chemical formulae may be a valid ground for termination. 3. Termination of the service of a workman on the ground of continued ill health is another ground recognized as a valid ground of termination.6 Prohibited Termination: Any termination that is not punishment as a result of disciplinary action or termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein, or termination of the service of a workman on the ground of continued ill health is considered as retrenchment and hence requires proper procedure to be followed as per the provisions of the Act. A termination which is based on no inquiry, no charge and is neither by way of punishment as a result of disciplinary action may be considered retrenchment.7 Section 12 (1) of the Maternity Benefit Act, 1961 makes it unlawful for an employer to discharge or dismiss a female employee 5 Mana Thomas Gonsalvies v. Concept Pharmaceuticals (P) Ltd, (2002) IV LLJ (Supp) Bom. 906 See Section 2 (oo) (c) of the Industrial Dispute Act, 1947 7 Sachiv, Krishi Upal Mandi Samiti Sanawad V. Mahendra Kumar, 2004 LLT 405 6

on account of her absence from work due to her pregnancy or give notice of discharge or dismissal when such notice period was to expire in her absence. Therefore, the employer can issue a notice of termination to the female employee provided the expiry date of the notice issued is after her date of joining service. It is considered advisable to negotiate a voluntary exit of the employee by paying a higher financial amount over and above the statutory dues, and contractual dues, in order to avoid any legal hassles wherein the retrenchment procedure is a complex and cumbersome exercise exposing the employer to the risk of litigation. Contractual Obligations: The employment contracts signed between the employer and employees/workmen play a significant role in determining the terms and conditions of termination. Any procedure or terms agreed in the employment contract must be followed in order to avoid any law-suit based on contractual liability. Proper legal planning based on the law and terms of employment contracts for retrenchment/lay-off may minimise any legal hurdles and consequences. Compensation for Retrenchment: Section 25 F of the Act lays down the procedure for the retrenchment and provides for compensation for retrenched workman. The employer must satisfy the following conditions before retrenching a worker employed for a period of continuous period of not less than one year: (i) one month‟s notice in writing to the workmen indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice8; (ii) payment of retrenchment compensation which shall be equivalent to fifteen (15) days average pay (for every completed year of continuous service) or any part thereof in excess of six months; and (iii) notice in the prescribed manner is served on the appropriate government.9 Depending upon the applicability, a workman may be entitled to gratuity (if served continuously for 5 years or longer) and other conditions under The Payment of Gratuity Act, 1972. Gratuity is payable at the rate of 15 days salary for per completed year of service. Similarly, statutory dues 8 Note: Notice period of 3 months has been prescribed in case of 100 or more employees, see section 25N of the Industrial Disputes Act, 1947. It must be noted that if the employment contract contemplates any longer notice period, such notice period or salary/wages in lieu of such notice must be honoured accordingly. 9 Note: Prior approval from the state government is required for retrenchment of workman of an industry with 100 or more employees, see section 25N of the Industrial Disputes Act, 1947

such as leave encashment and provident fund, if and as applicable, are required to be paid at the time of termination. DISCLAIMER: The document has been prepared and produced only for the information purpose only and is not to be construed as an advertisement, solicitation, invitation, personal communication or inducement of any kind by the Firm, the author or any of its Partner or associates. The entire content of this document has been developed on the basis of relevant statutory provisions and as per the information available at the time of the preparation. Though the author has made utmost efforts to provide authentic information, however, the material contained in this document does not constitute/substitute professional advice that may be required before acting on any matter. The author and the firm expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.

CONTACT US MUMBAI Mastermind- I, Royal Palms Estate, Aarey Colony, Goregaon (East), Mumbai -400065 Tel: +91 9820079664 Fax: +91 9810037390 PANKAJ SINGLA Japan Desk, Corporate Professionals NEW DELHI D-28, South Extension Part - I, New Delhi – 110049 Tel: +91-11-40622200 Dir: +91-11-40622293 Fax: +91-11-40622201 Mob:+91-99715-08320 Email: pankaj@indiacp.com BEDFORD (UNITED KINGDOM) 2-4 Mill Street, Bedford MK40 3HD U.K. Tel: +44 (0) 2030063240 Fax: +44 (0) 2030063241

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