Japanese Investment to India Current trend and future prospect

1
Japanese Investment to India - Current trend
and future prospect -

• January 23, 2006

Hiroshi Tsukamoto President Japan External Trade
Organization (JETRO)
2
Contents

• (1) Introduction India Regaining Global Economic
  Position
• (2) Overview of Japanese Investment to India
• (3) Recent Trends of Japanese Investment to India
• (4) JETROs Activities towards Stronger Economic
  Relationship
• (5) Conclusion India and Japan in East Asia

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(1) Introduction India Regaining Global Position
India Attracting Japans Attention

• Growing middle class market (600 million in 2010
  ?)
• (2) Indian economy featured in business magazines
• (3) Indian stock boom
• (4) Increasing reference to JETRO
• - country ranking 200220th?200314th?
  200411th

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(1) Introduction India Regaining Global Position
Development of Ties between the Governments

• (1) Joint Study Group for future EPA negotiation
• (will be reported in June 2006)
• (2) Prime Minister Koizumis visit to India
  (April 2005)
• Agreed on Japan-India Partnership in a
  New Asian Era
• (3) Mr. Aso, Foreign Ministers visit to India
  (January 2006)
• First overseas trip after his
  appointment as Foreign Minister
• (4) Mr. Nikai, METI Minister Meeting with
  Minister Kamal Nath (Dec. 2005)
• (Agreed on developing economic ties between
  the two countries, especially, Japanese SMEs
  investment to India.)
• (5) Indian Ministers visit to Japan scheduled in
  2006

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(2) Overview of Japanese Investment to India

• Cumulative FDI in India (Aug. 1991 to Dec. 2004)

(Japan ranked 4th)
Japan
(Rs million) Source Compiled by JETRO
from SIA News Letter
by Ministry of Commerce and
Industry, India
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Japanese Investment in India (1)
(3) Recent Trends of Japanese Investment to India

• 328 Japanese-affiliates in India (as of Jan.
  2006)
• Location
• Delhi 67 Bangalore 57 Mumbai 45 Chennai 36
  
• (2) Major Sectors
• Automotive Components, Trading,
  Machinery, Electrical Goods,
• Transport, IT, Infrastructure
• Many investment from Japanese Affiliates in
  ASEAN, which does not appear
• in statistics.

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Japanese Investment in India (2)
(3) Recent Trends of Japanese Investment to India

• Trends
• (1) Expansion of automotive and motorcycle
  market
• (2) Investment for expansion of factories
• (3) Expansion of investment sector
• (e.g. machine tool, automated production
  line,
• engineering service)
• (4) Investment from affiliates in ASEAN

8
JETRO Survey of Japanese Manufactures in ASEAN
and India (March 2005)
(3) Recent Trends of Japanese Investment to India
(2) Planning to expand its operation in 1-2 years
()
(1) Profit prospects in 2005 (DI)
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(3) Recent Trends of Japanese Investment to India
India as an Emerging Economy

• JBIC report on Japanese Manufacturers' Overseas
  Business Operations (2005)
• Promising countries/regions for business
  development in the medium term
• - India ranked 2nd for the first time

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(3) Recent trend of Japanese investment to India
A Number of Business Missions to India

• Year 2005
• Nov Fukuoka City, Nippon Keidanren
• Dec Kansai Economic Federation
• Year 2006
• Jan JAPIA (Japan Auto Parts Industries
  Association)
• Okayama Prefecture
• Feb JETRO/METI
• SMRJ (Organization for Small
  Medium Enterprises and
• Regional Innovation,
  Japan)
• April/May JASME (Japan Finance Corporation
  for Small and
• Medium Enterprise)

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(3) Recent Trends of Japanese Investment to India
JETRO/METI India Investment and Business Mission
(1) Date February 5-12, 2006 (2) Visiting Place
New Delhi, Bangalore, Chennai / Kolkata
(3) Sector - Car and motorcycle
- Electrics and electronics, CAD/CAM -
IT, Bio, RD, Out-sourcing (4) Members
Over 70 Japanese businessmen (including SMEs)
and METI officials
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Expected Fields
(3) Recent Trends of Japanese Investment to India

• Automotive and motorcycles
• (2) Infrastructure
• (US150 billion estimated to be needed in 10
  years)
• (3) Raw materials
• (e.g. chemical products, steel)
• (4) Bio industry (bio-informatics,
  pharmaceuticals)
• (5) Food processing
• (6) Service sector
• (e.g. hotel, tourism, medical tourism,
  retail, transportation)

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Efforts on India Side
(3) Recent Trends of Japanese Investment to India

• Destination India campaign
• (2) Japan Cell in Minister of Commerce
  Industry
• - One-stop centre for Japanese investors
• - In cooperation with JETRO expert to
  PHDCCI
• (PHDCCI Punjab, Haryana, Delhi
  Chamber of Commerce and Industry)
• (3) SEZ (Special Economic Zone) Law in effect
  (May 2005)
• (4) Revision of Press note 18 (eased regulation
  on NOC)

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More Efforts Expected on India Side
(3) Recent Trends of Japanese Investment to India

• Infrastructure (e.g. electricity, logistics)
• (2) Tax procedures, Administrative procedures
• (3) Labor issues (e.g. labor strikes in Honda,
  Toyota)
• from JETRO Survey of Japanese Manufactures in
  ASEAN and India (March 2005)

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Indian Investment to Japan
(3) Recent Trends of Japanese Investment to India

• (1) IT Software companies
• -About 70 Indian software companies operating
  in Japan
• -5,000 Indian engineers in working in Japan
• (2) JETRO IBSC
• Two Indian software companies utilized
  utilized IBSC and started operation in Japan
• JETRO IBSC http//www.jetro.go.jp/en/invest/
  investmentservices/facility.html

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India - Japan Business Matching
(3) Recent Trends of Japanese Investment to India

• Upgrading Indias existing manufacturing and
  supporting industry.
• (2) Matching Japans advantage in hardware, and
  Indias advantage in software.
• ltNeed more opportunities to gain correct and
  enough
• about each other.gt

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Providing Indias Information to Japanese
Businessmen
(4) JETROs Activities towards Stronger Economic
Relationship

• Seminars Symposiums
• - 4 seminars in 2005 (Tokyo(twice), Nagoya,
  Yokohama)
• - 3 seminars planned in 2006
• - India Seminar in ASEAN countries (Bangkok,
  Singapore)
• - Symposium Economic Integration in Asia and
  India
• (Dec. 2005, Tokyo) - 400 participants

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For More Attractive Investment Environment
(4) JETROs Activities towards Stronger Economic
Relationship

• (1) Strengthening PHDCCI (dispatching experts)
• (PHDCCI Punjab, Haryana, Delhi
  Chamber of Commerce and Industry)
• (2) Cooperation in developing supporting industry
• (mainly in auto parts industry)
• (3) Overseas Investment Advisor in Bangalore
• (4) JETRO Business Japanese Proficiency Test
• (New Delhi, Mumbai, Bangalore)

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Programs for Business Matching between India and
Japan (1)
(4) JETROs Activities towards Stronger Economic
Relationship

• (1) IETF (International Engineering Technology
  Fair) 2007
• Japan participating as Partner Country
  (for the first time in 10 years)
• (2) India Chem 2004, 2006
• 2004 Japan participated as Partner
  Country
• 2006 Japan participating as Guest
  Country

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Programs for Business Matching between India and
Japan (2) - High-Tech Area
(4) JETROs Activities towards Stronger Economic
Relationship

• (1) IT Software
• - IT Seminars and Exhibitions
• e.g.) The India IT Exhibition,
  Outsourcing Fair (J-OFIS)
• (2) Bio Informatics
• - Exhibitions (Bio Japan, Bangalore Bio)
  
• - Exchange among researchers scientists
  
• e.g.) Univ. of Pune and Riken, Japan
  

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(5) Conclusion India and Japan in East Asia
Economic Integration in East Asia

• Indias Look East Policy from 1992
• (2) FTA/EPA in progress in East Asia
• JapanSingapore, Malaysia, Thailand
• Philippines, Korea, Indonesia,
  ASEAN
• India Thailand(early harvest),
  Singapore, SAFTA,
• ASEAN, BIMSTEC
• (3) East Asia Summit (2005.12)
• 16 countries gathered
• (ASEAN 10, Australia, China, India, Japan,
  Korea, New Zealand)
• India and Japan in East Asia economic
  zone

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Thank you very much for your attention.
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