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India looks at Japan to achieve its disinvestment targets

08 April, 2016

India is leveraging its strategic partnership and pitching to Japanese investors to invest in India’s resources space and state-run firms.

To help India meet its stake sale targets, a delegation led by Neeraj Kumar Gupta, secretary, department of investment and public asset management, was in Japan earlier this week for a roadshow to present investment opportunities in state-run firms such as Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd, NTPC Ltd, NHPC Ltd, Oil and Natural Gas Corp. Ltd and Indian Oil Corp. Ltd.

“This is an attempt to meet our disinvestment targets. We are looking at both equity and debt capital,” said an Indian government official requesting anonymity.

Even as India has been missing its disinvestment goals, the government has set yet another ambitious target to raise Rs56,500 crore in the financial year ending March 2017 through stake sales in public sector units.

“Investment bank Nomura arranged meetings of the delegation with investors. The delegation dwelled on the alternative modes of disinvestments, which the government of India has decided for reducing its stake in CPSEs (central public sector enterprises) besides the capital market route,” the Indian embassy in Tokyo said in a statement.

The Financial Express newspaper reported on 16 March about the government’s plan to market public sector units among investors in Japan and the US.

This visit also comes in the backdrop of India’s plan to auction one rare earth deposit in Rajasthan. These rare earth elements are used in modern technological devices such as smartphones, solar panels, wind mills and hybrid car components. India inked a deal with Japan in 2010 to supply rare earths to Tokyo, after China stopped its supplies to Japan.

“The delegation is quite hopeful of garnering interest from marquee Japanese investors such as DIAM Asset Management, Sumitomo Mitsui Asset Management, Nissay Asset Management, Mitsubishi UFJ Kokusai Asset Management to participate in the disinvestment programme,” the Indian embassy statement added.

India and Japan share a special relationship which was articulated during Japanese Prime Minister Shinzo Abe’s visit to India in December.

“Our future-oriented partnership raises our collaboration to a new level in areas of infrastructure, manufacturing and high technology, including advanced transportation systems, civil nuclear energy, solar power generation, space, biotechnology, rare earths and advanced materials,” said a joint statement released by the two countries in December.

Experts believe that India’s move to tap Japanese investment is a positive and right approach. “Japan has been looking for investment opportunities in India since long. Our metal and mining industry is yet to develop and we have huge mineral resources which need to be further explored. In this direction, India has done right to engage with Japan,” said S.K. Roongta, former chairman of SAIL.

Japan is playing an important role in India’s quest for infrastructure development by assisting in important projects such as the dedicated freight corridor for railways. Also, after Indian Prime Minister Narendra Modi’s visit to Japan in 2014, the Japan Plus initiative was launched wherein a select group of officials were tasked with expediting Japanese investments in the country.

Infrastructure development is necessary for India to achieve a gross domestic product growth of 7-7.75 per cent for the current fiscal. The total outlay for infrastructure announced in the Union budget for 2016-17 is Rs2.21 trillion.

Note: This story has been republished with corrected data.


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India looks at Japan to achieve its disinvestment targets

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