1. JAPAN
TRADE RELATIONS WITH INDIA, INVESTMENTS AND FUTURE
PROSPECTS
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2. TABLE OF CONTENT
Investments in India
Top Countries Investing in India
India Advantage
Indo-Japan Ties
Japanese Investments
Areas Attracting Investment
Top companies Investing in India
JETRO Survey
Small and Medium Industries
Problems Faced During Expansion
Concerns and Opportunities
Crosscoop Business Centre
Japanese Business Centre
Conclusion
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3. Investments in India
India has a conducive foreign investment
environment that provides freedom of entry
and favorable location
Government has done away with the complex
pre-entry approvals. FDI through automatic
route possible
Most investments are made to services sector
due to availability of skilled manpower
19
12
7
6
5
5
4
4
4
3
0 5 10 15 20
Services Sector
Construction Development
Telecommunication
Computer Software and Hardware
Drugs and Pharamaceuticals
Chemicals
Power
Automobile Industry
Metallurgical
Hotel and Tourism
SECTOR WISE % SHARE OF
INVESTMENT
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4. Top 10 countries investing in India
Country (Rank wise)
FDI inflows(in US $ million.)
August ’91 – Mar ’12
% share of total inflows
Mauritius 67,777 37.1
Singapore 17,496 9.6
UK 16,567 9.1
USA 13,014 7.1
Japan 9,146 5.0
Netherlands 7,737 4.2
Cyprus 6,425 3.5
Germany 5,293 2.9
France 3,207 1.8
UAE 2,254 1.2
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5. India Advantage
DEMOGRAPHIC
FACTORS
POLICY RELATED
FACTORS
₪6th most attractive investment destinations
|KEARNEY Business Confidence Index, 2003
₪India has the Best licensing regime |KEARNEY
₪India was rated among the most favourite
investment destinations|UNCTAD, JETRO, JBIC,
Deutsch Bank, EIU etc.
₪Major destination for foreign venture capital
funds |Far Eastern Economic Review
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7. Indo-Japan Ties
Japan: 4th
Largest
Investor
More than
1422
Japanese
companies
Delhi
Mumbai
Industrial
Corridor in
partnership
with Japan
Delhi
Mumbai
Freight
Corridor in
partnership
with JapanThe major
sector of
investment:
Drugs &
Pharmaceut
icals
Major
Japanese
clusters in
Delhi &
NCR
Exports
automobile
s to India
₪Initiatives like ‘Namaste India’ and ‘India
Centre’ intend to strengthen the ties between
the two countries
₪Major pacts like CEPA and Japan-India
Economic Partnership Agreement have been
signed for trade and investment promotion
₪Top sectors for future investment
‡ Indian Power Sector
‡ Pharmaceuticals
‡ Civil Aviation
‡ Logistics
‡Biotechnology
‡Nano-technology
‡Agro Processing
‡Clean technology
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9. Areas Attracting Investment From Japan
29%
16%
14%
9%
5%
Sectors Attracting FDI₪ Pharmaceuticals is the major sector
attracting investments from Japan
(Rs. 20,239.75 Crores- Jan’00-Dec’11)
₪RBI branch office at New Delhi received an
investment of Rs. 1220.81 Crores
₪Companies like Nissan, Suzuki and Yamaha
investing heavily
₪After a policy intervention, services sector is
now open for investment
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10. Top Companies Investing In India
TOP JAPANESE COMPANIES INVESTING IN INDIA AMOUNT OF FDI INFLOWS (in Rs. Crore)
DAIICHI SANYO CO. LTD 19804.03
JFE STEEL CORPORATION 4,800.72
NIPPON LIFE INSURANCE COMPANY 4238.61
NISSAN MOTORS 1927
MATSUSHITA ELECTRIC WORKS LTD. 1866.55
SUMITO MITSUI BANKING CORPORATION 1366.12
HONDA MOTORS CO. LTD 1200
HITACHI 1159.50
SUZUKI MOTOR CO. LTD. 1000
(through Indian companies, from April 2000 to February 2013)
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11. JETRO SURVEY
About JETRO(Japan External Trade Organization)
JETRO-a government related organization promotes mutual trade and
investment between Japan and the rest of the world.
About JETRO-Survey
Survey of Japanese-Affiliated Companies in Asia and Oceania (FY 2012
Survey)
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12. Most of the Japanese companies in India were
established after 1996
Improved operating profits in emerging
economies forecasted for 2013
A large number of firms planning to downsize
their China operations and look to invest in
India
87.5% looking to expand in the automobile
industry and 83% in wholesale and retail in
India
Japanese firms put priority on local market
development in India rather than developing
exports
83.6% firms intend to expand operations in
couple of years
62.4% firms expecting an increase in operating
profits in 2013
87% of respondents correspond this increase
to increase in local market sales
Key Findings
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13. Business Development
67.2% firms
would like to
employ
locally
35.3% firms
would like to
employ
Japanese
expatriates
Most
Japanese
firms would
like expand
their sales
capabilities
89.7% cited
‘increase in
sales’ as the
main reason
for expanding
India
operations
72% see high
growth
potential in
India
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14. Proportion of Profitable Japanese Firms
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15. Downsizing in China
Increase of
costs
Difficulty in procuring
labour
Relationship with
clients
Tightening of
regulations
Sales Decrease
₪ China has been a major destination for
Japanese investment
₪ According to recent surveys, firms are
shifting their base from China to India
₪ Low labour costs, large market and skilled
workforce attract investments into the country
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16. Small and Medium Industries
‡ FIEO and JETRO have joined hands to
promote Japanese SMEs in India
‡FIEO in association with JETRO is organizing a
three prong strategy to help SMEs of the two
nations.
† One: Aggressive seminars in metros, plus two
tier cities.
† Second: Exchange of delegation. Take the SME
delegation to Japan and exchange their
delegation and then have B2B meeting with
them.
† Third: Participate in their leading exhibitions
Break-up of SMEs in India
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17. Problems Faced During Expansion
Wage
Increase
Growing
market share
of
competitors
Power
shortage or
blackout
Difficulty in
procurement
of material &
rising costs
Complicated
customs
clearance
procedures
Difficulty in
recruiting
executive
staff
Drop in FIIs due to the depreciating rupee
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19. Bureaucracy
is a major
deterrent.
Concerns and Opportunities
India’s growing middle
class an opportunity for
foreign firms to invest Concerns that plague entry of
Japanese firms
83% of
Japanese
SMEs
targeting
the middle
class
70%
middle
price range
to tap the
market
75.2%
overall in
manufactu
ring
sectors.
74% in
finance
and
Insurance
85% are
concerned
about the
price
competitive
ness
66% firms
take the
local
companies
as
competition
70% firms have prioritize on
local market development
rather than developing exports
to India
Product
differentiati
on
Secure
and train
human
resource
s
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20. Conclusion
Japanese investments in India have been on the rise, specially after the souring of ties between Japan and China
With the current economic slowdown, the FIIs into the country have come down, but Japanese companies are positive about
investing in the growing economy once it stabilizes
A Japanese Business centre at a location like Gurgaon is favourable due to it’s proximity with industrial locations like Manesar
and Neemrana. Since most of the Japanese automobile companies set up manufacturing units in India, it makes sense for
them have their corporate offices in the vicinity
Although initially they have their Japanese staff, data shows that most of these companies would like to employee locally.
Generally the ratio is 35%:65%
Staff, fluent in Japanese, to cater to the needs of these companies in the centre is crucial for business dealings. The staff should
also be acquainted with the Japanese work culture to help the companies in the transition process.
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