Japanese companies invested $4.7 billion last year in India, says envoy
Date: June 27, 2017
Source: livemint by Elizabeth Roche
New Delhi: Japanese ambassador to India Kenji Hiramatsu says that Japanese investments into India are growing steadily with more and more companies setting up base in India. That Japanese companies are not able to make a profit immediately after entering the Indian market is not seen as a deterrent, he says. Hiramatsu also explains the concept behind the Asia-Africa Growth Corridor and does not see it as a counter to China’s ambitious Belt and Road Initiative. Edited excerpts from an interview.
The India-Japan trade figure is around $16 billion. What can be done to improve this?
I think we have room for enhancement of the trade relationship between two countries. We have already signed the Comprehensive Economic Partnership Agreement (CEPA). And I think in this framework we have been having regular discussion to improve our trade relationship. And of course there are some ways to that. I can give you some examples. Like some Japanese companies operating here, and producing their products in India, and now they have started to export their product to Japan, for example Suzuki has started exports of their automobile – Baleno — starting in March last year. And also some Japanese pharmaceutical companies which have their production bases in India are planning to export their products to Japan. So things are now happening.
But I would like to mention that not only talking about bilateral trade figures but there is also dynamic kind of movement with regard to Japanese investment especially in the manufacturing sector. As you know, Japan maybe one of the biggest investors in the manufacturing sector in India. Last year the total amount of investment from Japan to India was $4.7 billion which was a significant increase compared to the previous year when it was $2.6 billion. It means that many companies are shifting their operation bases or manufacturing bases to India and they are producing their products here and selling them in the Indian market. Also they are developing industries or local part industries, as in they are making spare parts and not importing from Japan. It means that we are not only talking about the bilateral trade figure but in a wider context. Also I would like to say that the products that are produced here are exported to Japan, and some to the wider global market including Africa, Middle East and other neighboring countries, so Japanese companies are looking not only at the Indian market but also at the regional and the global market.
The Modi government is putting a lot of emphasis on improving the ease of doing business. What is the feedback that you have from Japanese companies on the ease of doing business in India?
I think there are a couple of reasons why Japanese companies are looking very positively at the Indian market — one is the very aggressive, positive initiatives taken by the Modi government to make the Indian investment environment better. Also India is a growing market, the growth rate is around 7%-8%. India has also a very stable government, a lot of new initiatives have been taken in regard to reforms, regulation and initiatives to make the business climate easier.