Shinzo Abe’s visit: Predictable tax regime must for investments to follow through

Shinzo Abe, who was hosted by the UPA government as the chief guest for the Republic Day celebrations, is coming back to India for the third time

Written by Shubhajit Roy | New Delhi | Updated: December 12, 2015 7:54:50 am
shinzo abe, shinzo abe visit, india japan relations, india bullet train, bullet train route in india, shinzo abe investments, india japan investments, narendra modi, sushma swaraj, shinzo abe varanasi Japanese Prime Minister Shinzo Abe presides over the Japan India Innovation Seminar in New Delhi, India Friday, Dec. 11, 2015. (AP Photo/Manish Swarup)

If there was one relationship which was certain to get a boost after Narendra Modi becomes Prime Minister, it was with Japan. Modi had visited a couple of times as the Gujarat chief minister and had met Japanese premier Shinzo Abe.

In the last year and half, the two have seized every opportunity to meet each other – from PM Modi’s visit last year to Kyoto and Tokyo to last month’s meetings in Turkey, Malaysia and Paris – the two have bonded with each other on Twitter and in person.

Now, it’s time for their personal chemistry to translate into some tangible results in the bilateral relationship.

Abe, who was hosted by the UPA government as the chief guest for the Republic Day celebrations, is coming back to India for the third time.

His three-day visit is expected to yield some concrete outcomes, which will give a boost to the massive USD 34 billion investment commitment made by him last year, during Modi’s visit.

While the nuclear deal is still being negotiated, pacts on bullet trains and other infrastructure projects are ready to be signed during the visit.

But, for the Japanese firms to follow through the investment commitment made by their PM, they need a predictable tax and regulatory regime in the country.

In fact, to resolve such issues, a Japan-only mechanism was set up late last year.

The Japanese, like most business in the West, want certainty and predictability. Their investments are always carefully thought through and are not made in haste.

Modi will have to assure them of predictability, and that’s where the Goods and Services Tax legislation is a good example, which needs to be followed up by the Indian government.

Much will depend on their Saturday conversation, and the two could bring in tangible outcomes for the relationship.

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