Complex tax system is the barrier: Seiko Epson chief
September, 08th 2014
India has accorded high priority to Japan, and has considered it as its strategic business partner. What is your view on the renewed partnership between the two countries?
Mr. Modi said that Japan had strength on hardware manufacturing and India was strong in software. Everything that is manufactured is a combination of hardware and software. Therefore, I think we can have great relationship with India. We make very sophisticated products, for example, electronic items and printing in which software is used, which we now import. Henceforth, we will have happy association with India.
During the Prime Minister Narendra Modi’s visit, Japan announced that it would invest $35 billion in India’s infrastructure, skill development and manufacturing in five years. So far, Epson has not made any investment in any factory in India . Would you now consider investing in a factory in India?
India is a very important country. Therefore, we are considering investing here. But right now there is no plan, and we are yet to decide. I see big opportunity in India. Now we are studying.
Though we have not made any investment in manufacturing in India, we have accorded high priority to India. Earlier, the Indian operation was part of Singapore. Now, Epson India has been recognised and is directly reporting to the headquarters in Japan. We have regional customer support centre for the entire South-east Asia, which is controlled out of Bangalore. We also have customisation centre in India, which was earlier in Japan only. There are other ways of looking into the importance we are giving to the Indian market. Already some of our factories have excess capacity, unless we come to the utilisation of that stage, the need for next factory will not arise.
What are Japanese industry people, mainly corporates, thinking about India? Some Japanese companies have had bad experience in investing here. With the renewed optimism, what are people thinking when India is expecting the number of Japanese companies in India would double in five years.
We now have good relationship with the Tata Group. We are supporting their watch manufacturing at Titan. Luckily, we have been successful in India. But we are facing difficulties due to the complex tax structure like import duty. When we move products from one State to the other, some tax is imposed. That kind of State to State tax variation does not suit us. The complex tax system is the barrier. The Goods and Services Tax, which the government has been talking, is yet to be implemented. We want improvement in this area.
The other thing is procedural delays. When we try to get some approval, it takes a lot of time. These should be streamlined.
Talking of infrastructure, China has developed through a strong central government direction. But in India, the State governments seem to have more powers. So, a strong decision-making from the Central Government is lacking. Unified action in deployment across the country is necessary. Three years ago I visited Neemrana industrial park (in Rajasthan) as part of our study to consider putting up a manufacturing unit. But I found it not up to the mark. It was so difficult to procure power, and facilities were lacking. But now I am optimistic about India.
The Indian government is talking about bringing in a digital revolution in the country. How can you help in this digital drive?
Globally, we are a digital imaging company. So, we will benefit the most if any country goes digital. We are digital in print, digital in screen, the projectors, and smart glass. So, we would like to support the initiative of the Indian Government for improving the class rooms. We want to support the government in its initiatives in banking for its inclusive economic agenda. We have digital imaging products which will drive growth and this is our focus in a country like India.
What is your approach for the Indian printer market?
Indian customers have expressed their desire for freedom to print. This is why we decided to develop the printer using ink tank system. By using this, people can print at 1/10 of the cost of laser printing.
Total Indian printer market is 3.1million units (Rs.2,288 crore), and is expected to grow to 3.4 million units (Rs.2,588.3 crore). Inkjet printers are making strong inroads into laser market offering greater value. In India, we have been No.1 in dot matrix printers, No.1 in bill printers, and now we have become No.1 in inkjet printers in value terms. The Indian A4 printer market is expected to grow rapidly in 2014. Though overall market growth in India is in single-digit, Epson has consistently achieved double-digit growth. Last year, while other brands showed a decline, Epson grew 11 per cent year-on-year. And we will continue the growth momentum.
How important is India as a growth driver for Epson?
India is a very important market for us. It has huge potential, and we have made good progress. It has very intelligent people. We can further expand the market here, and we can get intelligent staff from India for our business. In future, emerging countries are very important for Epson.