Yamazaki Mazak Corp. is a leading machine tools manufacturer in Japan. According to the news articles of Nikkan Kogyo Shimbun (Business & Technology Daily News) on August 5, 2008, Yamazaki Mazak gave up building new factory for machine tools in India. India is considered as one of the countries where the export control is insufficient, thus they may suffer diversion risk of illegal export from India to somewhere third country. The news source imply Yamazaki Mazak failed to get export license by METI for this India project.
As similar case in 2007, MORI SEIKI CO., LTD., another major machine tools company, abandoned the new factory set up in Thailand to be compliant to export control regulation. The candidate machine tools which planned to be produced, had high technical specification needed export license by METI.
Yamazaki Mazak have already searched the land for factory in India, planning to start the production in 2009. The factory was supposed to produce low-end machine tools for India domestic market. There are, however, concerns for being used for military use in India other than illegal re-export to third countries.
In Japanese export regulation, India is not considered as "safe" country. In addition, India is not a member of all the international export control regimes and not implementing export controls as strictly as those in Japan. Japanese METI disclose 26 Indian entities in the proliferation concern list, as they are organizations that may have relationships with WMD and/or missile activities.
From trade compliance perspective, export regulation indeed must be followed.
However, too strict restriction will lose competitiveness of Japanese companies and burdens for business. Especially for India, US government has a very important and a strategic relationship with India and is going to be understood in the broader context of facilitating trade in the foreign policy context. If Japanese government continue to be too strict in implementation to India, it may jeoparadize the long term strategy for trade policy in Japan.