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In the nineties, pioneers of Indian IT had to sell India before selling their services. Often, the first slide used to be a world map, with US and India marked out with airline routes. The pioneers sold well. Within three decades, we have crossed $300 billion in IT services exports and the trillion-dollar figure is within reach.

Over the past three years, I have worked with multiple Japanese clients who are building businesses in India. This engagement accelerated after the management consulting firm I co-founded became part of a Tokyo-listed (and Singapore-headquartered) consulting and investment company. Over the past three months, I have met dozens of Japanese companies to understand their India plans. What I learnt may be summarized in three statements:

One, many Japanese companies, and almost all conglomerates, are keen to invest in India. Two, many are unsure about how to enter India. Three, most are scared about the inherent ambiguities and uncertainties in the Indian market. Let me elaborate:

One, nobody doubts the fundamental opportunity of the Indian market. In fact, one Japanese leader told us that after ChatGPT, India is the second most-discussed topic in Japanese boardrooms. Thirty years of growth and evangelization has re-established Bharat as the land of milk and honey. Establishing the opportunity is no longer the challenge.

Two, there is significant confusion on how to enter India. We heard many questions: Do we acquire or build organically? Given the noise in the M&A market, how do we find the right targets? Can we manufacture in India, or should we import for the domestic market? Which state has the best incentives? Are consumers ready to pay for Japanese quality? Do we hire local leadership or send expatriates? Do we build ourselves or partner with a local player? How can we identify the right partner? These questions indicate that a standard playbook for the Japan-India corridor is yet to emerge.

Three, there is a palpable sense of fear about the Indian market, which to the relatively orderly and disciplined Japanese, appears to be the embodiment of VUCA (volatility, uncertainty, complexity and ambiguity.) This perception discourages Japanese companies from taking large bets on India. The resulting smaller and cautious bets (such as posting a few expat managers to scout the market) rarely lead to outsized returns and this creates a vicious cycle: lack of meaningful success stories discourage new bets.

Therefore, the Japan-India corridor needs a different kind of pioneer from the West. The evangelization needs to focus on how to access the market and how to de-risk meaningful bets, rather than the opportunity. There are four ways to do this:

First, industry-specific advocacy groups (such as Nasscom for IT) comprising individuals and companies with deep roots in Japan and India need to be built. The members of this group need to have deep experience and networks in both markets, and they need to run focused campaigns with Japanese companies on how to enter India and de-risk investments.

While the relationship is well-established in auto and manufacturing, such advocacy groups are required for IT, deeptech, consumer products, and so on.

Second, these advocacy groups must curate industry-specific lists of potential Indian partners. Having a body that is trusted by both parties that vets potential partners will help address the risk perceptions Japanese companies have on India.

Third, there is an opportunity to build funds (both venture capital and private equity) focused on the Japan-India corridor. These funds should pool investments from Japanese companies and build a track record of successful investments in India, across sectors. This will help Japanese companies build confidence in the Indian market while avoiding direct exposure.

Finally, there is space for specialized advisers, who have networks, capabilities and experience in both markets, to emerge as facilitators in the Japan-India corridor. These advisers need to be committed to this corridor, as given the cultural and linguistic nuances, customized solutions are necessary. These advisers should help build the standard playbook for Japanese investments in India.

Japan’s population (and therefore, market) is shrinking, and India is the last large market left to drive global growth. It is for us to lose billions of dollars of Japanese investment.

Abhisek Mukherjee is a Partner at YCP Auctus.

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