Japanese firms rank India as top investment destination

Japan Inc is upbeat about India’s economic growth story despite rising geopolitical uncertainties. More than 72 per cent of Japanese companies said they were keen to expand their business operations in India which topped the chart, a survey by Japan External Trade Organisation (JETRO) revealed. Notably only 33.4 per cent said that they would be keen to expand their business operations in China, the survey revealed.

Vietnam is a close second with 60 per cent firms opting for the Southeast Asian nation.

Not just that. India also topped the list of countries from which Japanese firms expected to increase their profit margins amid the rising global challenges. According to the survey 63.2 per cent of the companies expected their profitability to increase while the figure was 26.8 per cent for China.

“Most Japanese companies are looking at India to expand their businesses. The experience of the Japanese companies which are already operating in India has been very good. The sentiment here is positive,” Takashi Suzuki, Chief Director General (South Asia), JETRO, told India Narrative.

Suzuki added that Japanese companies are also looking at India for their product development for the global markets. “They would manufacture here and then export. Africa and the western countries – are the main regions that the companies would be looking to export their products from India,” he said, adding that the Aatmanirbhar Bharat programme will be a game changer in this respect.

“It goes with (Prime Minister Narendra) Modiji’s vision as well – that you make in India and then export,” Suzuki said.

In May, Prime Minister Modi, who was in Japan to attend the QUAD summit, held a meeting with the top 30 CEOs of Japanese companies. “Make in India for the World” –was Modi’s message to the Japanese business community.

In August Daikin India announced that it will invest Rs 5 billion over the next three years to establish a research and development centre in Neemrana, in Rajasthan. The centre will conduct R&D on air conditioners for the Indian market as well as for exports. The centre is expected to start operations by December 2023. Suzuki, one of the most trusted brands here, set up Suzuki R&D Center India Private Limited with the aim to strengthen competitiveness in the country by efficiently linking the R&D departments in India and Japan.

Several Japanese majors including Panasonic, Toshiba, Sony and NEC already have their R&D centres in India. In 2021, Fujitsu set up its R&D base.

At present, Japan is the fifth largest investor in India. The cumulative foreign direct investment (FDI) stood at $37.7 billion between April 2000 and till June, this year.

In March, Japanese Prime Minister Fumio Kishida announced an investment plan of Rs 3,20,000 crore (5 trillion yen) in India in the next five years.

Japanese clothing brand Uniqlo, which forayed into the Indian market just three years ago, turned profitable this year despite huge Covid related challenges. The company registered a net profit of Rs 21.4 crore in 2021-22 compared to a loss of Rs 36.1 crore in the previous year.

“To turn profitable in just three years is a big thing. Typically a company looks at a 10 year horizon to turn profitable, but Uniqlo has managed to record profits in three years,” Suzuki noted.

Suzuki also said that despite the Covid wave, India managed to turn around the situation within record time. “India was the only country to turn around in such a short time,” he said.

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