Economy

Nirmala Sitharaman’s Japan’s visit is key as India positions itself as the global manufacturing hub

Finance Minister Nirmala Sitharaman’s Japan visit has acquired relevance because of the underlying economic diplomacy amid Japanese companies looking to expand investments and diversify their existing businesses in India. Japan, which has already committed to invest $42 billion in India in the next five years, is now interested in new sectors of growth which include e-commerce, healthcare, agro-tech, retail– other than automobiles or electronics. Though Sitharaman was in Japan to attend a G7 meeting, the Finance Minister has tried to use this opportunity to highlight the changing economic and business contours in India.

India is an invitee to G 7 Finance Ministers and Central Bank Governors meeting. Incidentally while India has acquired the one year presidency of the G20 nations, Japan is chairing the G7.

“This will be important as Japanese companies are keen to invest more in India but we need to market ourselves even better to ensure that we do not lose out to other nations,” a researcher engaged with an industry body said. Several countries including Vietnam are coming up as credible investment options. Japan is already Vietnam’s third-largest investor after Singapore and South Korea.

Interestingly however, India remains the top investment destination for Japanese companies. A study by Japan External Trade Organisation (JETRO) revealed that more than 72 per cent of the Japanese companies are keen to expand their operations in India. For China, the number is small at only 33.4 per cent.

According to a report released in November 2021– undertaken by Nasscom in partnership with the Nomura Research Institute, Japanese investment in India has grown four times since 2016 creating 102,000 jobs.

Despite her busy schedule, Sitharaman also interacted with investors and business leaders on the theme of “Rising Investment Opportunities: Destination India”, organised jointly by the Japan Chamber of Commerce & Industry (JCCI) and the Indian Embassy.

The focus now is to draw more small and medium enterprises from Japan into India.

“Japanese companies are very positive about India’s economy,” Takashi Suzuki, Chief Director General (South Asia), JETRO told India Narrative. “Until now, Japanese companies have had a very good experience in India. Our companies are making profits. If you see Uniqlo, it has already turned profitable within three years of entering the Indian market,” he said, adding that there are several issues including as well which need to be resolved.

“While Aatmanirbhar Bharat is a very good policy, at times in certain cases, India’s trade policy tends to be protectionist. So if imports of certain items which also include raw materials and several food items are restricted, it poses a big challenge for the smaller companies,” Suzuki said.

In March, Japanese Prime Minister Fumio Kishida visited India—the second visit in a year.

Last year, Prime Minister Narendra Modi during his visit to Tokyo invited Japanese businesses to invest in India as well. The high profile back-to-back visits will further boost bilateral engagements including economic cooperation of both countries.

Meanwhile, as India aims to be the global manufacturing hub, New Delhi must readjust its policy decisions in a timely manner to boost investments, especially in the changing world order. Or else it could well be a missed opportunity for India.

Also read: Govt inks pact with Japan to develop 4 stations as smart hubs on Mumbai-Ahmedabad rail route

Mahua Venkatesh

Mahua Venkatesh specialises in covering economic trends related to India and the world along with developments in South Asia.

Recent Posts

VINBAX 2024: Vietnam-India bilateral army exercise concludes at Kaushalya Dam

The fifth edition of the historic Indo-Vietnam Joint Field Training Exercise, VINBAX-2024, successfully concluded its…

12 hours ago

India-Russia strengthen defence ties at 22nd Working Group meeting on military technical cooperation

The 22nd meeting of the India-Russia Working Group on Military technical cooperation and defence industry…

12 hours ago

“I want to have strong representation of India at World Nuclear Exhibition 2025”: Sylvie Bermann

Sylvie Bermann, President of the World Nuclear Exhibition expressed confidence in India's nuclear supply chain…

13 hours ago

PoJK: Joint Awami Action Committee protests against government following new ordinance, many injured

Joint Awami Action Committee core member Shaukat Nawaz Mir has condemned the attack of police…

13 hours ago

PM Modi meets 31 world leaders, heads of organisations during his 3-nation foreign visit

Prime Minister Narendra Modi participated in 31 Bilateral Meetings and informal interactions with global leaders…

16 hours ago

India- Australia conduct 11th Indian Air Force-Royal Australian Air Force Air Staff Talks

India and Australia conducted the 11th edition of the Indian Air Force and Royal Australian…

16 hours ago