Of late, there has been a massive surge of Japanese business interest in India. Around 200-300 firms from the island nation, including multi-million dollar companies Hitachi Medical and Asahi Beer, are actively looking to set up base in this country.
With an aging population at home and a contracting market, after China, India is seen as the next logical growth area for the Japanese industry, say industry observers.
“Most of the Japanese companies are now interested in the Indian market, because it is a big country and they see a huge potential for the future. Previously, the investment climate was not as good, but now, the Indian Government is trying to relax some policies,” Mr Masaki Ida, Chief Director-General, Japan External Trade Organisation (JETRO), New Delhi, told
As of October last year, 812 Japanese firms were in India, with 1,422 separate investments, such as branches, warehouses and factories.
Preference for India
Though most Japanese companies already have Chinese operations, the poor intellectual property protection regime and mandatory joint venture rules make it hard to conduct business there, an industry expert added. Hence the growing preference for India, with which Japan has historically shared close cultural and business relations.
The Indo-Japan Free Trade Agreement that came into effect last August also holds promise. It aims to eliminate import duties on 94 per cent of the trade items in 10 years, giving a boost to bilateral trade which is expected to touch $25 billion by 2015 (from about $12 billion in 2010).
Mr Ravi Avalur, Partner and Vice-President, Tecnova India, said that 2-3 years ago, around 600 Japanese companies had an India operation, which has now more than doubled.
New sectors
Tecnova specialises in India market entry strategy for multinationals and is working with a variety of Japanese firms in this regard.
“There is a sense of renewed business interest from Japan. Till now, sectors such as auto and electronics had Japanese presence, but now, breweries and chemical companies are also looking to set up base. Japanese companies move slow, but come in groups,” he said.
Meanwhile, Japanese funding support for ongoing domestic infrastructure projects such as the Dedicated Freight Corridor (DFC) and $90 billion Delhi-Mumbai Industrial Corridor (DMIC) is viewed as an ideal collaborative opportunity. While Japan's expertise in Railway systems is expected to be utilised in the DFC, firms from the country are also reportedly looking to set up manufacturing facilities in the DMIC.