India overtakes China as most attractive market for Japanese firms

Tokyo: India has overtaken China as the most attractive overseas investment destination for Japanese manufacturers over the next decade amid increased labour costs in China, reports PTI quoting a survey.

China, however, remained the most popular investment destination over the next three years in the survey conducted last summer, having retained top spot since fiscal 1992 when the state-backed financial institution began conducting the survey by the Japan Bank for International Cooperation.

The result suggests that an increasing number of Japanese companies are aiming to diversify foreign investment amid caution about rising labour costs and anti-Japanese demonstrations in China.

An additional survey conducted in November in the wake of bilateral tension over the Senkaku Islands in the East China Sea provided further evidence of the trend.

China no longer dominates Japanese foreign investment and Japanese companies "are increasingly turning their attention to such (emerging) markets as India and Vietnam," said Toshiharu Mimura, a senior economist at JBIC.

In the survey conducted in the summer of 2010, in which multiple responses were allowed, 74.9% of the 605 Japanese manufacturers selected India as their investment destination over the next 10 years, compared with 71.7% that chose China. In the previous year, China was first and India second.

As a destination over a shorter period, China came top at 77.3%, followed by India at 60.5% per cent, Vietnam at 32.2%, Thailand at 26.2%, and Brazil at 24.6%.

The companies that chose China and India said they viewed the two markets as having high growth potential.

Many companies, however, expressed concern over rising personnel costs in China amid the country's rapid economic growth, as well as labour issues, apparently reflecting a recent rise in disputes between Japanese firms and Chinese workers seeking wage hikes.

In the follow-up study to gauge the investment stance of Japanese companies after maritime collisions between a Chinese trawler and Japanese patrol boats near the disputed Senkaku Islands in September, 24.8% responded that China was not as attractive as before, while 46.9% said it was important to reduce their dependence on China and diversify investment risks.

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Oil ministry not in favour of raising diesel, LPG prices: Deora

New Delhi: Oil minister Murli Deora today said his ministry is not in favour of raising diesel and domestic LPG prices as a response to the spurt in global crude oil prices, as the move will add to already high inflation rate, reports PTI.

"We are trying to see that we do not have to increase prices," he told reporters here.

Last week a meeting of the Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee was indefinitely postponed on Mr Deora's insistence of not raising fuel prices just now.

"I don't think the EGoM should meet just now to decide on raising prices," Mr Deora said today.

Others in the government have favoured raising fuel prices as a response to hardening of international crude oil rates to over $90 per barrel while Mr Deora has preferred government subsidies to lessen burden on the common man.

Diesel has a weightage of 4.67% in inflation, while LPG contributes 0.91%. A hike now would further accelerate inflation, which is currently at 7.48%.

Mr Deora wants the government to make up for at least half of the Rs72,812 crore revenue loss state-owned oil firms are likely to incur this fiscal on selling diesel, LPG and kerosene below cost.

The EGoM was originally scheduled to meet on 22nd December but was deferred to 30th December. The meeting was at the last moment deferred without a new date being given.

The panel was to meet to consider at least a Rs2 per litre hike in diesel price and Rs30-Rs40 per cylinder raise in LPG rates.

Mr Deora said the government would do everything possible to protect balance sheets of state-owned oil firms and insulate the common man from vagaries of international market.

"In 2008, when crude oil shot up to $147 per barrel, we insulated the common man and provided for Rs1,03,000 crore from the budget to subsidise fuel," he said.

The under-recovery (or the revenue oil companies lose) on diesel today stands at Rs6.99 per litre, sources said.

Besides diesel, the oil firms lose Rs19.60 per litre on PDS kerosene sales and Rs366.28 per 14.2-kg LPG cylinder.

The oil firms had last month raised petrol price by Rs2.94-2.96 a litre but the hike was short of Rs3.5 a litre desired increase to make retail prices at import parity.

The government had in June 2010 freed petrol prices, but the state firms, which control 98% of the retail market, continue to informally consult the oil ministry before revising prices.

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Iran oil exports to India on despite dispute

Dubai: Iran's oil exports to long-time trading partner India had continued despite a dispute over the method of payment, reports PTI quoting a top Iranian official.

According to a Tehran Times report, Ahmad Qalebani, the head of state National Iranian Oil Company (NIOC) said the two countries were determined to carry on co-operating despite problems in agreeing to a new payment method after India said last week it would no longer use a regional clearing house system which had been criticized for being opaque.

"The economic co-operation between Iran and India in this (oil trade) connection is still continuing," Mr Qalebani said.

Mr Qalebani, however, made no reference to any new arrangement between the two countries, which implied the issue remained unresolved.

Iran's deputy oil minister Ahmad Khaledi had earlier said that the dispute with India had been settled by changing the currency for trading.

"By changing the currency for oil transactions between Iran and India the problem was solved," he was quoted as saying.

Meanwhile, the local unit of ratings agency Moody's has said the India-Iran oil payments row could hit Mangalore Refinery and Petrochemicals' (MRPL) profitability if the dispute continues beyond a month, ICRA, said on Monday.

"If the issue remains unresolved beyond a month, MRPL's refining throughput could be impacted as it tries to find alternative sources to replace crude oil imported from Iran under term contracts," ICRA said.

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