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India is the preferred destination for Japanese manufacturing companies as per the FY2014 Survey Report on Overseas Business Operations released by the Japan Bank for International Cooperation (JBIC), giving a boost to Prime Minister, Narendra Modi's 'Make in India' initiative.
The annual survey is conducted by JBIC with an objective to identify the current trends as well as the future outlook of overseas business operations by Japanese manufacturing companies with an extended record of overseas business. The survey examines ‘medium-term business prospects’, ‘evaluations of overseas business performance’, and ‘promising countries or regions for overseas business operations’.
In the FY2014 JBIC survey, 617 manufacturing companies that have three or more overseas affiliates (including at least one production base) responded to the questionnaires. The majority of the respondent companies belonged to the automobiles, electrical equipment & electronics and chemical industry.
Notably, for the first time since the survey began in 1989, India ranked as the No. 1 destination for future investments followed by Indonesia (No. 2) and China (No. 3), reflecting the positive sentiments of Japanese investors for the Indian market.
During his maiden visit to Japan in September 2014, the PM gave an open invitation to Japanese companies to consider India as a 'competitive low-cost manufacturing hub'. He also announced setting up a special management team to facilitate investment proposals from Japan.
Following this commitment, Japan Plus was set up by the Union Government in October 2014. The team will support the Indian government in initiating, attracting, facilitating, fast-tracking and ‘handholding’ Japanese investments across sectors. It is actively interacting with Japanese companies and handholding them through various approval processes, as and when required.
As for upcoming investments by Japanese companies in India, Honda Motorcycle and Scooter India, the wholly owned subsidiary of Honda Motor Company, Japan, is setting up a two wheeler plant in Gujarat with an investment of Rs 1,100 crore. .
Suzuki Motor Corporation (SMC) of Japan, is planning to invest Rs 18,500 crore, for setting up a new factory in Gujarat.
Uno Minda has signed a joint venture agreement with Japan's Toyoda Gosei Co to manufacture and sell rubber hoses in India. The partners will set up a JV firm with an investment of Rs 85.3 crore, in a phased manner. Amtek India has also formed a joint venture with Japan-based Riken Corporation, to build an iron casting foundry in Rajasthan.
As per a PIB release in October 2014, the number of Japanese companies in India had reached 1,209, which was 13 per cent higher over the same period last year. Some Japanese companies are seriously contemplating their future investment plans in India amounting to about Rs 75,000 crore (approx US$ 12 billion) in the next two-three years.
During the period April 2014 to October 2014, FDI inflow from Japan amounted to US$ 1,042 million against US$ 460 million for the corresponding period in 2013. FDI inflow of US$ 103.14 million took place in October 2014.
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