For Japanese companies, India a huge but isolated market: JETRO India

If India continues to remain an isolated market for Japan, investment flow from Japan would be constrained.

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NEW DELHI: As Japan gears up to widen its business spectrum in India by investing in non-conventional sectors medical, food, service, and information technology (IT), and also promote SMEs and startups here, the world’s third-biggest economy has advised India to join global value-chain to attract dynamic investment from across the world.

Yasuyuki Murahashi, Chief Director-General, Japan External Trade Organisation (JETRO) India said this in the Preface in Fifth Wave of India-Japan Relations, the investment handbook recently released jointly by Invest India and Standard Chartered.

Yasuyuki Murahashi, Chief Director General, Japan External Trade Organisation (JETRO) India

“Japanese industry has already diversified its edge to ASEAN Nations. India has not established a strong value chain with Japan, ASEAN and the other regions of the world. In other words, for Japanese companies, India is a huge but isolated market. Future growth of the Indian market is promising. However, if India continues to remain an isolated market for Japan, investment flow from Japan would be constrained,” said Yasuyuki Murahashi.

According to JETRO while comparing with the number of Japanese companies operating in ASEAN countries and India, there are 11,000 plus companies (by Teikoku Databank survey 2016) in the ASEAN region versus 14 hundred plus (of 2018) in India. This is almost eight times the difference. In the last three decades, the Japanese industry created a cross-border ecosystem of manufacturing or regional industrial value chain in the ASEAN region and upgraded local suppliers with international competitiveness. With this, Japan could enjoy ASEAN as the manufacturing hub as well as the size of the market.

“Being a team member to international value-chain, India could enjoy in sharing the burden on the respective country`s strength, huge united market and common use of resources, and the connected area shall be the center of industry where more dynamic investment flows are expected,” said JETRO India chief.

JETRO admits that Japanese companies have come to recognise that their conventional ‘in-house innovation model’ has its limits. And as well as the other nations, they are coming around to recognise the Indian capability.

“Combining the strengths of Japanese companies in manufacturing and services with Indian IT technologies will expand the potential for success across a wide variety of fields. In this light, I am expecting more Japanese players to set a base in India as well as more Indian players to start doing business in Japan,” added Yasuyuki Murahashi.

“Therefore, we have to look at other potential industries. Invest India and JETRO have been working on some sectors such as medical, food-related, service and information technology. Another focus is to increase the number of SMEs including the deployment of startups. Of the above, we are looking at the digital field as the most prospective field for new investments. Today, Japanese companies are focusing on creating innovation in the rapidly changing global markets, where the swift creation of solutions is necessary.”

The JETRO India Chief observed, “When Japan could utilize India’s capability of engineering, affordable resources such as human and capital, there can be a great alliance represented in the Pan-Pacific and Indian Ocean regions. I can also add that the Middle East and Africa will also be the playing fields for the India Japan team.”

“India has already taken the position as the most prospective partner for Japanese companies but we could do more. Creation of better business prospects through materializing iconic success of Japanese investment and facilitation of better business environment by executing ease of doing businesses are the twin engines for the accumulation of Japanese investments. With this honoured opportunity to contribute a note in this report, I would like to commit myself to work together with Invest India to achieve this common goal,” summed up.

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3 Comments
  1. Pooja says

    Very impressive article…!
    I totally agree with you, both India and Japan have tremendous scope for future ventures. Our company is working in Japan as well as India. It’s true that India have a very large market.
    I am looking forward to the new policies that will help organizations to invest more.

  2. G Solanki says

    Hi I’m interested

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