Indo-Japan Trade & Investment Highlights  India and Japan are moving forward in the automotive industry  Japan’s Mei Prefecture keen on SME Partnerships  Nucleus Software joins hand with Waseda University in Japan for India Internship Programme  LinguaNext opens its first full subsidiary in Japan  Toshiba Lighting & Technology Corporation want to see India as its next Manufacturing Base  Aegis Logistics establishes a JV with Itochu Petroleum Corporation  Auto parts maker FCC Company in Japan acquires 50% stake in FCC Rico  Uniqlo to open 100 stores in India  JBIC and SBI ink deal to set up an export credit line for power plant in Uttar Pradesh  JBIC and GMR Infrastructure sign MOU to finance Japanese Companies  Indian generic drug makers eye Japanese market Knowledge Centre  Regulatory Framework of Core Investment Companies in India

1. Indo-Japan Trade & Investment
Bulletin
September Issue
2014
Japan Desk, Corporate Professionals

2. INDEX
Indo-Japan Trade & Investment Highlights
 India and Japan are moving forward in the automotive industry
 Japan’s Mei Prefecture keen on SME Partnerships
 Nucleus Software joins hand with Waseda University in Japan for India Internship
Programme
 LinguaNext opens its first full subsidiary in Japan
 Toshiba Lighting & Technology Corporation want to see India as its next
Manufacturing Base
 Aegis Logistics establishes a JV with Itochu Petroleum Corporation
 Auto parts maker FCC Company in Japan acquires 50% stake in FCC Rico
 Uniqlo to open 100 stores in India
 JBIC and SBI ink deal to set up an export credit line for power plant in Uttar Pradesh
 JBIC and GMR Infrastructure sign MOU to finance Japanese Companies
 Indian generic drug makers eye Japanese market
Knowledge Centre
 Regulatory Framework of Core Investment Companies in India

3. Indo-Japan Trade & Investment Highlights
India and Japan are moving forward in the automotive industry
JAMA (Japan Automobile Manufacturers Association) and SIAM (Society of Indian Automobile
Manufacturers) have signed a memorandum of understanding (MOU) to further extend the co-operation
with each other to strengthen opportunities with exchange of information. The
Membership of both JAMA and SIAM includes manufacturer of cars, two-wheelers and trucks.
This MOU is an extension of a relationship between both entities which will be on a next level in
the coming years by focusing on undertaking an innovative approach for addressing trends of the
market in both countries, and will have credible long term solutions.
Japan’s Mei Prefecture keen on SME Partnerships
Mie Prefecture of Japan has shown a keen interest in making inroads into the SME space in India.
Eikei Suzuki, Governor of Mie prefecture, during his visit to Bangalore signed an MOU with the
State of Karnataka for industrial cooperation. It is noteworthy that a number of large Japanese
companies such as Toyota, Honda, Toshiba and Fujitsu come from Mie prefecture and the focus
of the MOU is to enable SMEs from Mie Prefecture achieve the similar success in India. The MOU
focuses to help SMEs by conducting a survey to identify strengths and shortcomings in Karnataka
and also to encourage Indian companies to explore opportunities for investment in Mie prefecture.
Nucleus Software joins hand with Waseda University in Japan for India Internship
Programme
Nucleus Software, Indian global software product and solutions company, is partnering with
Waseda University in Japan for launching an internship program at Indian headquarters of Nucleus
Software. With this initiative, Nucleus hopes to motivate the young students from Japan to
understand the product innovation and learn the spirit of software product development. With this
three weeks internship program, the best talent in the industry can emerge because of intern’s

4. exposure to IT products focused on financial industry that is likely to help the company attract
continuous flow of knowledge and talent between India and Japan.
LinguaNext opens its first full subsidiary in Japan
Lingua Next Technologies Pvt ltd, a Pune-based software product company has now opened its
first wholly owned subsidiary outside India in Japan. The company is optimistic that Japanese
companies will find utility in its language localisation software, which allows customers to convert
their business software into a different language from the language it was written in, in order to
penetrate other markets with localisation of language of their software products.
Toshiba Lighting & Technology Corporation want to see India as its next Manufacturing
Base
Japanese electronics major Toshiba is investing in its subsidiary Greenstar with a target of
achieving profit of US $ 40 million (Rs 243 crore) in the next five years. Toshiba wants to enlarge
its share in the Indian lighting market by utilizing all its resources and capabilities. Toshiba
acquired Greenstar in 2012, which had started as a design centre and has co- developed the new
global models of streetlight. While Toshiba manufactures its lighting products mainly in China
and Japan, it is planning to make India a manufacturing hub not only for the local market but also
for the global needs.
Aegis Logistics establishes a JV with Itochu Petroleum Corporation
Itochu Petroleum Co (Singapore) Pte Ltd, a wholly owned subsidiary of Itochu Corporation, has
acquired 40% stake in Aegis Group International Pte Ltd., a subsidiary of Aegis Logistics Limited,
for a total consideration of $ 5.85 million. Aegis Logistics, India’s leading oil, gas, and chemical
logistics company has entered into this joint venture with Itochu to strengthen its position in
LPG sourcing, supply and shipping also to support its LPG import terminal capacity. Itochu being
one of the five largest LPG companies in the world, in terms of sales volume, will bring value to
the business plans of Aegis and help it scale up its capacity to meet the growing demand of LPG
in India.

5. Auto parts maker FCC Company in Japan acquires 50% stake in FCC Rico
FCC Company of Japan has acquired the 50% stake of its Indian partner Rico Auto in FCC Rico,
an equal joint venture between FCC Company and Rico Auto, for a sum of Rs. 495 crores,
therefore gaining full control on FCC Rico which is engaged in manufacturing clutch parts for
two-wheelers in India.
Uniqlo to open 100 stores in India
Japanese clothing major Uniqlo, a subsidiary of Fast Retailing Company of Japan, has revived its
plans to invest in India after the visit of its president Tadashi Yanai’s to India in June, 2014. The
Japanese clothing company has big investment plans for opening of 100 retail stores in India that
are likely to surpass the proposed investment of 1.34 billion Euros of Swedish furniture major
IKEA. Presently, the foreign investment upto 100% is allowed in single brand product retail
trading and proposals of foreign investment beyond 49% stake in Indian company in single brand
product retail trading require prior permission of government of India. Single brand product retail
trading is also subject to mandatory 30% local sourcing requirement; however, a well-established
local textile industry means that investors in single brand product retail trading should not have
much difficulty in meeting the local sourcing norms.
JBIC and SBI ink deal to set up an export credit line for power plant in Uttar Pradesh
Japan Bank of International Cooperation (JBIC) and State Bank of India (SBI) have entered into
an agreement to provide export credit line to Meja Urja Nigam Private Ltd. (MUNPL) to finance
procurement of steam turbine generator equipments for construction of a super critical pressure
coal-fired 1320 MW (660MW X 2 units) power plant in Meja, Uttar Pradesh. MUNPL which is
an equal joint venture between National Thermal Power Corporation Ltd. and Uttar Pradesh Rajya
Vidyut Utpadan Nigam Ltd. will procure the stream turbine generator equipments from a Japanese
company and its subsidiary in India. As per the statement issued by SBI, the loan of JPY 13.5
billion ($21 million) will be co-financed by the Bank of Tokyo-Mitsubishi UFJ Ltd.
JBIC and GMR Infrastructure sign MOU to finance Japanese Companies
Japan Bank for International Cooperation (JBIC) and GMR Infrastructure have reached an
understanding through MOU whereby JBIC will extend financial help to Japanese companies

6. investing in infrastructure projects of GMR. The objective is to make low cost long term financing
available for infrastructure projects involving Japanese companies. JBIC and GMR, through this
MOU, seek to support and improve development of the necessary infrastructure and will also work
together to identify projects to attract Japanese investment.
Indian generic drug makers eye Japanese market
India generic drug makers are exploring options to tap into Japanese drug market which is
estimated to be around $110 billion. The sale of generic drugs account for almost 30% of the drug
market in Japan and thereby represent an opportunity worth $33 billion. The government is Japan
has expressed its desire to raise the share of generic drugs to 60 per cent by 2017 in order to make
healthcare more affordable. Generic drug makers from India including Lupin, Dr Reddy's
Laboratories, Sun Pharma, Glenmark, Shasun Pharma and many others have already been making
efforts to penetrate the Japanese market.

7. Knowledge Center
Regulatory Framework of Core Investment Companies in India
As per the provisions of Section 45I of the Reserve Bank of India Act, 1934 (“RBI Act”), a
company registered under the Companies Act, 1956/ Companies Act, 2013 which is engaged in
the business of acquisition of shares/bonds/debentures/securities or other marketable securities like
leasing, hire-purchase, insurance business, chit business, loans and advances is considered as a
Non-Banking Financial Company (“NBFC”). Similarly, a company engaged in the business of
receiving deposits under a scheme or arrangement of lump sum or instalments (by way of
contributions or any other manner) is also included under the ambit of the NBFC. All the NBFCs
are required to obtain Certificate of Registration (“CoR”) under Section 45-IA of RBI Act. The
reason behind such requirement of obtaining CoR is to keep the financial activities of NBFCs
under a check through disclosure requirements. However, the requirement of obtaining CoR and
compliance with NBFC guidelines was considered to be unnecessary burden on companies that
are mainly engaged in holding investments in their group companies.
Legal Framework of Core Investment Companies
Keeping in mind the nature of business of the companies which have their assets predominantly
as investments in shares for holding stake in group companies1 and are not for trading purpose,
and also do not carry on any other financial activity, are defined as Core Investment Companies
(CICs). Accordingly, differential treatment in the regulatory prescription applicable to Non-
1Under CIC regulations, RBI refers to Accounting Standards for defining Group Companies. It is defined as an arrangement
involving two or more entities related to each other through any of the following relationships:
(i) Subsidiary – parent (as defined in terms of AS 21);
(ii) Joint venture (as defined in terms of AS 27);
(iii) Associate (as defined in terms of AS 23);
(iv) Promoter-Promotee [as provided in the SEBI (Acquisition of Shares and Takeover) Regulations, 1997] for listed
companies;
(v) a related party (as defined in terms of AS 18);
(vi) Common brand name, and investment in equity shares of 20% and above.

8. Banking Financial Companies which are non-deposit taking is made available to CICs. CICs that
are non-deposit taking and are not Systematically Important are exempted from the requirement
of registration with the RBI applicable guidelines.
As per Para 2 of RBI’s Master Circular on Regulatory Framework for Core Investment Companies,
the CICs were not considered as carrying on the business of acquisition of shares and securities in
the following cases:
1. if not less than 90% of their net assets2 were in investments in shares for the purpose of
holding stake in the investee companies; with invest of at least 60% in equity shares;
2. if they were not trading in these shares except for block sale (to dilute or divest holding);
3. if they were not carrying on any other financial activities; and
4. if they were not holding / accepting public deposits.
The relevant provisions applicable to the CICs under The Core Investment Companies (Reserve
Bank) Directions, 2011 have been reproduced herein below:
“These directions shall apply to every Core Investment Company, that is to say, a non-banking
financial company carrying on the business of acquisition of shares and securities and which
satisfies the following conditions as on the date of the last audited balance sheet:-
(i) it holds not less than 90% of its net assets in the form of investment in equity shares, preference
shares, bonds, debentures, debt or loans in group companies;
(ii) its investments in the equity shares (including instruments compulsorily convertible into equity
shares within a period not exceeding 10 years from the date of issue) in group companies
constitutes not less than 60% of its net assets as mentioned in clause (i) above;
(iii) it does not trade in its investments in shares, bonds, debentures, debt or loans in group
companies except through block sale for the purpose of dilution or disinvestment;
2 Net assets, for the purpose of this provisio, would mean total assets excluding –
(i) cash and bank balances;
(ii) investment in money market instruments and money market mutual funds;
(iii) advance payments of taxes; and
(iv) deflerred tax payment.

9. (iv) it does not carry on any other financial activity referred to in Section 45I(c) and 45I(f) of the
Reserve Bank of India Act, 1934 except investment in
i) bank deposits,
ii) money market instruments, including money market mutual funds
iii) government securities, and
iv) bonds or debentures issued by group companies, granting of loans to group companies and
issuing guarantees on behalf of group companies.”
Systematically Important Core Investment Company
As per the definition of systematically important core investment company (“CICs-ND-SI”) if a
CIC satisfies both the conditions as follows it is required to get registered with RBI as CICs-ND-SI.
1. The CIC has total assets of not less than 100 crore either individually or in aggregate along
with other Core Investment Companies in the Group; AND
2. The company raises and holds Public Funds3.
Such CIC-ND-SI is required to obtain CoR under Section 45-IA of the RBI Act and be governed
by the provisions of the RBI Act and the directions issued by the Reserve Bank from time to time.
Foreign Investment in CICs
Foreign investment into an Indian company engaged only in the activity of investing in the capital
of other Indian company/ies requires prior approval from the Government of India, regardless of
the amount or extent of foreign investment. Since the CICs are engage in the activity of investing
in the capital of their group companies, any foreign investment into a CIC is subject to prior-approval
from the Government of India.
3 “Public funds" includes funds raised either directly or indirectly through public deposits, Commercial Papers, debentures,
inter-corporate deposits and bank finance but excludes funds raised by issue of instruments compulsorily convertible into equity
shares within a period not exceeding 10 years from the date of issue.

10. 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.

11. CONTACT US
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
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Email: pankaj@indiacp.com
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