International Practice

# India-Japan Cross-Border
Legal Advisory

Japan

## Comprehensive Legal Counsel for the Japanese Market

Japan is the world's fourth-largest economy and one of India's most important strategic and economic partners in Asia. The India-Japan Special Strategic and Global Partnership, underpinned by regular bilateral summits and institutional dialogues, provides a robust framework for deepening economic cooperation. Bilateral trade between India and Japan exceeds USD 20 billion annually, spanning automobiles, machinery, electronics, pharmaceuticals, steel, chemicals, and information technology services. Over 1,400 Japanese companies operate in India, and a growing number of Indian IT, pharmaceutical, and manufacturing firms have established subsidiaries and branch offices across Japan's major commercial centres including Tokyo, Osaka, Nagoya, and Fukuoka.

ESB Global Law Advisory, based in Mumbai, provides specialised cross-border legal services for Indian businesses entering or expanding in the Japanese market. Our practice combines Indian legal expertise with a thorough understanding of Japanese corporate, commercial, and regulatory law to deliver practical, jurisdiction-aware counsel that addresses the unique characteristics of the India-Japan business corridor.

### Kabushiki Kaisha (KK) & Godo Kaisha (GK) Formation

Establishing a legal entity in Japan is the foundational step for Indian businesses seeking a direct market presence. The Companies Act of Japan provides two primary corporate structures suitable for foreign investors. The Kabushiki Kaisha (KK), or stock company, is the most widely recognised and prestigious corporate form, offering the credibility needed for business dealings with Japanese customers, partners, and financial institutions. A KK requires at least one director, a minimum capital of JPY 1 (though a capitalisation of at least JPY 5 million is practically advisable for Business Manager visa eligibility and banking relationships), articles of incorporation authenticated by a notary public, and registration with the Legal Affairs Bureau (Homu-kyoku). Following a 2015 amendment, a KK is no longer required to have a representative director who is a resident of Japan, although maintaining a Japan-resident officer is still advisable for practical and regulatory reasons.

The Godo Kaisha (GK), modelled on the American limited liability company, offers a more flexible and cost-effective alternative. A GK does not require notarial authentication of its articles, has simpler governance requirements, and incurs lower registration taxes. It is well-suited for wholly-owned subsidiaries, special purpose vehicles, holding structures, and operations where the prestige of a KK is not essential. ESB Global advises Indian companies on entity selection, drafts articles of incorporation and internal governance documents, coordinates with Japanese judicial scriveners (shiho-shoshi) for registration filings, and ensures compliance with post-incorporation obligations including tax registrations, social insurance enrolment, and annual reporting requirements.

### India-Japan CEPA Benefits & Trade Compliance

The India-Japan Comprehensive Economic Partnership Agreement (CEPA), which entered into force in August 2011, is one of the most comprehensive bilateral trade agreements India has concluded. The CEPA provides for the progressive elimination or reduction of customs duties on approximately 90% of bilateral tariff lines over a phased implementation period. Indian exporters of pharmaceuticals, textiles, chemicals, agricultural products, seafood, auto components, and engineering goods benefit from preferential tariff rates when shipping to Japan, provided they meet the agreement's Rules of Origin requirements. These rules include both general and product-specific criteria, covering value addition thresholds, change in tariff classification tests, and process-based rules for certain product categories.

Beyond tariff preferences, the CEPA covers trade in services with commitments on market access and national treatment across numerous service sectors, investment protection provisions including fair and equitable treatment standards and investor-state dispute resolution, and a chapter on the movement of natural persons facilitating short-term business visits and intra-corporate transfers. Japanese customs procedures, including advance rulings, post-clearance audits, and the Authorised Economic Operator (AEO) programme, apply to imports from India. ESB Global advises Indian businesses on CEPA utilisation strategies, Certificate of Origin procurement, tariff classification, Rules of Origin compliance, and customs dispute resolution before the Japan Customs and Tariff Bureau.

### Technology Licensing & Japan Patent Office Registration

Japan is a global leader in technology innovation and intellectual property protection. The Japan Patent Office (JPO), operating under the Ministry of Economy, Trade and Industry (METI), administers patents, utility models, trademarks, and designs. Patent applications can be filed directly with the JPO or through the Patent Cooperation Treaty (PCT) national phase entry, with Japan designated as a receiving office. Japanese patent examination is thorough, with an average pendency of approximately 10 months after a formal request for examination is filed, which must be submitted within three years of the filing date. Japan also offers a Patent Prosecution Highway (PPH) programme with India, allowing applicants to leverage favourable examination results from either country's patent office to expedite prosecution in the other.

For Indian technology companies licensing their innovations in Japan, structuring agreements that comply with both Indian and Japanese law is essential. Japan's Anti-Monopoly Act, administered by the Japan Fair Trade Commission (JFTC), imposes restrictions on certain licensing practices deemed anticompetitive, including tie-in arrangements, exclusive dealing obligations, and unreasonable grant-back clauses. Technology licensing agreements must also address the Japanese Unfair Competition Prevention Act, which provides protection for trade secrets that are managed under reasonable secrecy measures. ESB Global structures technology licensing, know-how transfer, and joint development agreements that protect the Indian licensor's rights while ensuring compliance with Japanese competition law and IP regulations.

### Immigration & Status of Residence Categories

Indian nationals seeking to work in Japan must obtain an appropriate Status of Residence under the Immigration Control and Refugee Recognition Act, administered by the Immigration Services Agency of Japan (ISA). The visa framework comprises over 30 categories, each with specific eligibility criteria, permitted activities, and duration of stay. For Indian business professionals and employees, the most relevant categories include the Engineer/Specialist in Humanities/International Services visa for skilled workers in technical, humanities, or international services fields; the Intra-company Transferee visa for employees being transferred from an Indian parent or affiliate company; the Business Manager visa for individuals establishing or managing a business in Japan; and the Highly Skilled Professional visa, a points-based category offering preferential treatment including extended stay periods, permission for multiple activities, and an accelerated path to permanent residency.

The Business Manager visa requires the applicant to demonstrate a physical office in Japan, either a minimum capital investment of JPY 5 million or the employment of at least two full-time residents of Japan, and a viable business plan. Processing times vary but typically range from one to three months. Japan has also introduced the Specified Skilled Worker visa categories for designated labour-shortage sectors, though these are more relevant for certain industrial and service sectors. ESB Global assists Indian companies with visa strategy, application preparation, supporting documentation, and coordination with immigration authorities and sponsoring entities to ensure smooth mobility of personnel between India and Japan.

### JCAA Arbitration & Dispute Resolution

The Japan Commercial Arbitration Association (JCAA), established in 1950, is Japan's premier institution for commercial arbitration and alternative dispute resolution. JCAA administers arbitrations under three sets of rules: the Commercial Arbitration Rules for standard international disputes, the Interactive Arbitration Rules designed for smaller and medium-sized claims with a more streamlined and cost-efficient procedure, and arbitrations conducted under the UNCITRAL Arbitration Rules with JCAA acting as appointing authority. Japan's Arbitration Act, enacted in 2003 and based on the UNCITRAL Model Law on International Commercial Arbitration, provides a modern, internationally harmonised framework that supports party autonomy, limits judicial intervention, and facilitates enforcement of arbitral awards.

Both India and Japan are signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, ensuring mutual enforceability of arbitration awards. For India-Japan disputes, parties frequently select JCAA, the Singapore International Arbitration Centre (SIAC), or the ICC International Court of Arbitration. Japanese courts, particularly the Tokyo and Osaka District Courts, have established specialised divisions for international commercial litigation and are generally supportive of the arbitral process, with limited grounds for annulment or refusal of enforcement. ESB Global advises on dispute resolution clause drafting tailored to India-Japan transactions, institutional selection, seat and venue considerations, arbitrator appointments, interim relief, and post-award enforcement in both jurisdictions.

### Our Japan Services Include

- Kabushiki Kaisha (KK) and Godo Kaisha (GK) incorporation and registration
- Branch office and representative office establishment
- India-Japan CEPA utilisation and Rules of Origin compliance
- Technology licensing and joint development agreements
- Patent, trademark, and design registration with the Japan Patent Office
- Anti-Monopoly Act compliance for licensing and distribution arrangements
- Immigration strategy and Status of Residence applications
- India-Japan DTAA planning and transfer pricing documentation
- Japanese employment law compliance and labour contract drafting
- JCAA, SIAC, and ICC arbitration representation
- M&A due diligence and transaction support for Japanese acquisitions
- Cross-border data privacy compliance under APPI
- Commercial contract drafting under Japanese law
- Customs and trade compliance advisory
- Corporate governance and annual compliance support

FAQ

## Frequently Asked Questions

### What are the main corporate structures available for Indian businesses in Japan?

Indian businesses establishing operations in Japan typically choose between two principal corporate forms. The Kabushiki Kaisha (KK), or stock company, is the most prestigious and widely recognised corporate structure in Japan, suitable for businesses seeking to build brand credibility and raise capital. It requires at least one director (who need not be a Japanese resident since the 2015 Companies Act amendment), a minimum capital of JPY 1, though practically a higher capitalisation is advisable for visa sponsorship and banking purposes. The Godo Kaisha (GK), or limited liability company, is a more flexible and cost-effective structure modelled on the American LLC, with simpler governance requirements and lower incorporation costs. A GK is suitable for wholly-owned subsidiaries, holding companies, and smaller operations. ESB Global advises Indian companies on selecting the appropriate structure based on their business objectives, capital requirements, and long-term growth plans in Japan.

### How does the India-Japan CEPA benefit Indian exporters?

The India-Japan Comprehensive Economic Partnership Agreement (CEPA), in force since August 2011, is one of India's most significant bilateral trade agreements. The CEPA provides for progressive elimination or reduction of customs duties on approximately 90% of tariff lines over a phased timeline. Indian exporters benefit from preferential tariff rates on goods including pharmaceuticals, textiles, agricultural products, seafood, chemicals, and auto components. To claim CEPA benefits, exporters must obtain a Certificate of Origin from designated Indian authorities and ensure their products meet the agreement's Rules of Origin, including value addition thresholds and product-specific rules. The CEPA also covers trade in services, investment protection, movement of natural persons, intellectual property, and competition policy. ESB Global advises Indian businesses on CEPA utilisation strategies, Rules of Origin compliance, and tariff classification to maximise preferential access to the Japanese market.

### What is the process for registering intellectual property with the Japan Patent Office?

Intellectual property registration in Japan is administered by the Japan Patent Office (JPO), a division of the Ministry of Economy, Trade and Industry (METI). Patents can be filed directly with the JPO or through the Patent Cooperation Treaty (PCT) route, with Japan as a designated state. Japanese patent examination is rigorous, with an average pendency of approximately 10 months after requesting examination. Trademarks are registered under the Nice Classification system with the JPO, and Japan also offers a unique system of defensive marks for well-known trademarks. Design registrations protect the visual appearance of products for up to 25 years. India and Japan are both members of the Paris Convention and the PCT, facilitating priority claims across jurisdictions. ESB Global coordinates with qualified Japanese patent and trademark attorneys (benrishi) to file and prosecute IP applications, handle opposition proceedings, and develop comprehensive protection strategies for the Japanese market.

### What immigration requirements apply to Indian professionals working in Japan?

Indian nationals working in Japan must obtain an appropriate Status of Residence (visa category) under the Immigration Control and Refugee Recognition Act. Common categories for business professionals include the Engineer/Specialist in Humanities/International Services visa for skilled workers, the Intra-company Transferee visa for employees transferred from an Indian parent company, the Business Manager visa for those establishing or managing a business in Japan, and the Highly Skilled Professional visa which offers expedited processing and favourable conditions based on a points-based system. Each category has specific eligibility requirements regarding qualifications, work experience, salary thresholds, and sponsoring company obligations. The Business Manager visa typically requires a registered office in Japan, minimum capital investment of JPY 5 million or employment of at least two full-time Japanese residents, and a viable business plan. ESB Global assists Indian companies with visa strategy, application documentation, and coordination with immigration authorities and sponsoring entities in Japan.

### How are commercial disputes between Indian and Japanese parties resolved?

Commercial disputes between Indian and Japanese parties are predominantly resolved through international arbitration, as both countries are signatories to the New York Convention. The Japan Commercial Arbitration Association (JCAA) is Japan's primary arbitration institution, administering disputes under its Commercial Arbitration Rules, Interactive Arbitration Rules for smaller claims, and the UNCITRAL Arbitration Rules. Other frequently chosen institutions for India-Japan disputes include the Singapore International Arbitration Centre (SIAC) and the ICC International Court of Arbitration. Japan's Arbitration Act, based on the UNCITRAL Model Law, provides a modern and arbitration-friendly legal framework. Japanese courts are generally supportive of arbitration, with limited grounds for setting aside or refusing enforcement of awards. For disputes involving Japanese court proceedings, the Tokyo and Osaka District Courts have specialised divisions for international commercial cases. ESB Global advises on dispute resolution clause drafting, institutional selection, arbitrator appointments, and cross-border enforcement of awards between India and Japan.

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