INDIA TO ADD GOODS TO ITS DUTY-FREE LIST

INDIA TO ADD GOODS TO ITS DUTY-FREE LIST

India will place all raw materials, capital goods and components on its list of duty-free imports beginning April 1, according to Palaniappan Chidambaram, commerce minister.

Mr. Chidambaram spoke Tuesday night at a meeting with a 100-member Japanese economic mission, the largest to come to India. Similar trade and business delegations paid visits last year from the United States, South Korea and Germany.Led by Rokuro Ishikawa, president of the Japan Chamber of Commerce and Industry, the Japanese delegation is here to assess the investment climate after the reforms launched by the government of Prime Minister Narasimha Rao.

Mr. Ishikawa said that a recent survey in Japan found 11 of 53 companies questioning investment in India, with a further 25 "interested."

The Japanese submitted a list of 21 requests for further reforms they judge necessary to attract investment. The mission asked the government to abolish restrictions on foreign equity, now generally limited to 51 percent, cease linking profit repatriation to export earnings, and remove restrictions on imports of capital goods, such as heavy equipment, and joint ventures.

The mission also wants early formulation of a policy allowing private companies freer rein on foreign exchange, reductions in import tariffs, relaxation of import licensing and improvement of industrial infrastructure.

Mr. Chidambaram said the Indian government will adopt most of the reforms suggested by the Japanese. It is also ready to provide a site in the southeastern port city of Visakhapatnam for an industrial zone using Japanese investment, he said. Japanese investors have long complained about the lack of proper infrastructure and poor living conditions.

Policy reforms have removed 90 percent of controls in the past six months. The rest will be eliminated as part of a new policy to be introduced at the start of the new fiscal year April 1, Mr. Chidambaram said.

He and P.J. Kurien, minister of state for industry, responded with equal candor to the Japanese delegation's blunt criticism of India's investment conditions.

Mr. Kurien complained that Japan's response to Indian liberalization had not been up to expectations, while the United States and Germany had reacted promptly.

Mr. Chidambaram noted that Japanese investment in India is a meager 0.03 percent of Japan's global investment. He complained that Japanese companies have been mainly interested in technical collaboration. Japanese imports from India are largely limited to iron ore, shrimp and diamonds.

Analysts here contend that the Japanese would like to turn to India for investment since labor costs are rising in Southeast Asia, but are still unsure about the stability of India's reform program.