Japanese investments in India

Looking out to shift some of its investments from China, Japanese Prime Mnister Shinzo Abe is likely to discuss options to help the 200-odd investment projects from his country facing delays in India due to Covid-19 disruptions in his video conference with Prime Minister Narendra Modi proposed next month.

The agenda of the India-Japan Summit, scheduled in September, may also include strengthening of digital partnership and infrastructure, dealing with Covid-19 crisis, making trade more balanced

The focus of the India-Japan Summit, which may take place around September 10, will also be on strengthening digital partnership between the two countries, removing hurdles identified by Japanese companies in India — including inadequate infrastructure — cooperation to tackle Covid-19 contingencies and bringing down the bilateral trade deficit suffered by India.

Japanese investments

Interestingly, earlier this year, the Japanese government earmarked $2.2 billion of its economic stimulus package to help its manufacturers shift production out of China to re-organise its supply chains after the Covid-19 disruptions. Of this, about $2 billion was allotted to companies for shifting production back to Japan and about $21.5 million to Japanese companies to start production outside China.

Tokyo then carved out a special subsidy package of about 100 million yen (approximately $1 million) to grant financial assistance to 10 companies, including automobile major Suzuki Motor Corp and optical device manufacturer Olympus Corp, for investing in innovative solutions in India in tie-ups with Indian IT firms.

Japan was the fourth largest investor in India, after Mauritius, Singapore and the Netherlands, accounting for cumulative foreign direct investments of $33.5 billion in the 2000-20 period, accounting for 7.2 per cent of India’s total inflows.

“There have already been Secretary-level talks between India and Japan on removal of various identified hurdles for Japanese investors and the talks between the Prime Ministers is expected to give the growing partnership between the two nations a bigger push,” the official said.

In a recently study, the Japan External Trade Organisation (JETRO) pointed out that there were just a little over 5,100 Japanese companies in India, whereas Japanese companies in China exceeded 33,000. In the 10-member ASEAN, there were around 13,000 Japanese companies.

Earlier this month, Commerce and Industry Minister Piyush Goyal assured that a focussed group of key officials will resolve Japanese investors’ concerns on logistics, customs clearance, export procedures and quality issues as more than 200 investment plans of Japanese companies are stuck in India, including factory construction and production-line expansion.