Japan's investments in India getting diverse

NEW DELHI: Even as the Modi government was finetuning various aspects of GST over the past year to put the tax regime in place eyeing to attract bigger volume of FDI, investments from India's key strategic and economic partner Japan have made a quantum leap during 2016-17. The Japanese investments in India during 2016-17 reached $ 4.7 billion registering a substantial jump from $ 2.6 billion during 2015-16.

Investments from Japan are getting diverse and sectors that have received FDI during 2016-17 period include retail, textile, consumer durables, food & beverages and banking (credit card services), persons familiar with the Indo-Japan economic ties told ET. The focus is now on fasttracking 12 industrial parks to be set up by Japan across various Indian states and this will also contribute to economic corridors that Japan plans to create in this country.

Japan currently ranks as the third biggest investor in India and highest investor as the single country source. Cumulative Japanese FDI in India is $ 25.67 bn between 2000 and 2017. Japanese FDI constituted 8 per cent of India’s overall FDI during this period.

Japanese FDI into India has mainly been in automobile, electrical equipment, telecommunications, chemical and pharmaceutical sectors. But officials pointed out that sectors are diversifying as India is undertaking economic reforms and GST will further boost Japanese investments here.

The total number of Japanese companies registered in India as of Oct 2016 is 1,305, with an increase of 76 companies (6% growth) as compared to 1,229 in October 2015. The total number of Japanese business establishments in India is 4,590, with an increase of 173 establishments (3% growth) as compared to 4,417 in October 2015. In the retail sector, top Japanese brand MUJI have opened stores in Delhi and Mumbai, officials said, adding, Japanese run restaurants have also seen a rise in Indian metros.

A 2016 survey by the Japanese government shows that maximum investments from Japan during the year have happened in Haryana, both in the number of companies and establishments. While the manufacturing sector accounts for half of the Japanese companies and one third of the Japanese business establishments in India, it is observed that new types of sectors, which were not seen earlier, are now coming to India, according to the survey.

Economic relations between India and Japan have vast potential for growth, given the complementarities that exist between the two Asian economies.