India: Japanese companies’ favored investment destination

India remains a desirable investment destination for Japanese companies. Today, over a thousand Japanese companies operate in India, versus 550 in 2008. Despite the fascination with India, what challenges do Japanese companies face as they grow their India operations? Miyuki Morozumi, Director of Japanese Client Service of Spire Research and Consulting, shared her views in Thik Hai Magazine, a leading periodical of the Japanese community in India.

Japanese companies are clearly adopting a more aggressive stance in entering the India market. Morozumi remarked that the National Capital Region (NCR) in particular has been a magnet for Japanese foreign direct investment (FDI) into India. Out of the 1,804 Japanese companies located in India, approximately 29% of them (517) were located within this region as at November 2012.

She observed that Japanese investment in India is largely focused on manufacturing, with industrial and automotive production concentrated in the South. However, Japanese FDI is slowly diversifying, with more investments in software, media and infrastructure. Japanese private equity and venture capital firms are also entering the India market, such as SoftBank, Netprice and SBI Holdings.

Despite its popularity as an investment destination, doing business in India remains challenging for Japanese firms. Morozumi discussed how Japanese companies should be mindful of the following when operating in India:

Opaque administration and tax compliance procedures which vary from state to state;

Lagging sea and air freight infrastructure with unreliable supply of electricity and non-potable water, in most cases;

Rising labor costs;

A lack of good partners and suppliers of raw materials, components and services, as compared with say China. Furthermore, as most Indian conglomerates are vertically integrated, it is difficult for Japanese firms to acquire suppliers without affiliation to a much bigger Indian group with which they may in some sense compete; and

Differences in culture; Japanese business persons might perceive Indian business culture to be unstructured and insincere, due to slower response rates, lack of enthusiasm and unpunctuality.

On the other hand, adapting to life in India is gradually becoming easier for Japanese expatriates. There are now more clustered residential developments catering to the Japanese community, especially in Gurgaon. There are readily available cultural institutions and schools catering to Japanese expatriates as well.

Japanese FDI into India is likely to increase, especially in the sectors of infrastructure, renewable energy, electronic system design and manufacturing (ESDM), consumer electronics as well as next-generation cars.

https://www.spireresearch.com/newsroom/media/india-japanese-companies-favored-investment-destination/

Comments

Side Click: Are you under the surveillance camera?

Identifying VIPs with strong purchasing power is crucial to retail success. More often than not, retail staff fail to do this in time. Facial recognition technology can help prevent this. But does it put our privacy at risk? With high-spending customers making out-sized contributions to retail profitability, it is increasingly crucial for retailers to provide personalized customer service the minute a VIP customer sets foot in the store. For instance, Katie Holmes reportedly spent USD100,000 on a fashion makeover and USD14,200 on lingerie alone in 2012! This is where identification technology can play a role. NEC, a Japan-based ICT vendor, has developed an identification application based on a facial recognition system – comparing the individual’s facial features against its database, and sending prompts when a match is identified. The initial purpose of the application was to help identify terrorists and criminals , but it was subsequently adapted to the retail setting....

Congestion stops traffic in SEA’s megacities

44 million people are being added to Southeast Asia’s urban population each year. As motor vehicle populations keep doubling every 5 to 7 years, what measures are being taken to tackle traffic congestion? Japnit Singh, Senior Director, Singapore and India of Spire Research and Consulting shared his insights in China Daily – Asia Weekly. Southeast Asia’s middle-class continues to boom, fuelling car population increases despite the relative lack of infrastructure. According to the Asian Development Bank, the region’s major cities suffer from some of the highest air pollution levels globally – as much as 80 per cent being attributable to road transport. Singh cautioned that building roads is not a solution, as this region faces severe practical limitations and escalating costs due to shortage of land in urban areas. In Bangkok for example, roads have the capacity for two million motor vehicles whereas five million ply the city’s roads each day. This has led to the military g...

The Philippines - Asia's next economic powerhouse

The Philippines is emerging as one of Asia’s most dynamic economies, with a forecasted growth rate of 6.9 per cent in 2018 driven by investment and private consumption. The economy recorded growth of over 6 per cent in 2017, for the sixth straight year, thanks to buoyant government spending, exports and a recovery in the agricultural sector. Will this Southeast Asian tiger be able to maintain its momentum? A growing economy While advanced economies like the United States, Europe and Japan are growing at slow rate, a number of emerging economies like the Philippines continue to surge ahead. With annual growth expected to reach 6.9 per cent by 2018, the Philippines now ranks as the 10th fastest growing economy globally. Owing to strong domestic demand and government projects, the country’s economy is on the rise. The government’s expansionary fiscal policy has aided capital formation and credit growth, whereas low inflation has strengthened private consumption. Path...

Ghana citizenships to boost economy

In November 2019, 126 African-Americans and Afro-Caribbean’s were granted citizenship, in a ceremony that marks 2019 as the Year of Return. 500,000 tourists are expected to visit Ghana during the Year of Return, a considerable increase from the 380,000 that visited in 2018. Visa on arrival for some and waive off of Visa charges have been introduced. The government also plans to invest in educated returnees to help boost the economy through employment. Is investment in human capital the way to boost Ghana’s economy? Read more: https://www.spireresearch.com/newsroom/spirethoughts/ghana-citizenships-to-boost-economy/

Is a Korean peace treaty on the cards?

The historical and unprecedented meeting between the two leaders of Korea is a monumental development. Can both leaders use this opportunity enhance geo-political stability and open up new economic development possibilities? Leon Perera, CEO of Spire Research and Consulting, shared his thoughts in The Business Times – Views from the Top section on 7 May 2018. Marking a remarkable change, the unprecedented meeting between the leaders of the two Koreas underlines the possibility of a peace treaty and denuclearization agreement. However, Perera expressed scepticism about North Korea’s commitment to completely renounce nuclear strike capability against Japan and South Korea, since this is the only factor ensuring regime survival. World leaders need to take this chance to limit the North’s nuclear capability while accepting that it may never be completely voided, bring the North into the global framework and work towards economic development on the Korean peninsula. Read...

The Knowledge to Decide

Search This Blog