Japan may diversify investments in India
2 min read 23 Sep 2022, 01:29 AM ISTJapanese firms have taken note of India’s potential in RE and govt’s efforts to achieve an energy transition
PremiumNEW DELHI : Japan is looking to bring in companies in non-conventional sectors such as renewable energy, digital technologies and healthcare to invest in India, South Asia representative of Japan’s Ministry of Economy, Trade and Industry Takuma Otaki said.
This marks a shift from the East Asian nation’s focus on its traditional strengths in the automobile sector.
Citing Prime Minister Fumio Kishida’s pledge to invest $42 billion in India, Otaki pointed to electronics and digital technologies as a key area for investment. As competition from South Korean and Chinese firms heat up, Japanese technology firms must increasingly look to pair up with Indian technological talent, he argued.
Another focus would be in renewable technologies. Otaki, who also serves as the director of Japanese External Trade Organisation’s offices in New Delhi, revealed that Japanese technology firm YHC was probing the possibility of setting up hydrogen electrolyser factories in India.
Japanese firms, he added, have taken note of India’s potential in renewable energy as well as the government’s efforts to achieve an energy transition.
In light of these ambitions, Japan is looking at the prospect of establishing a fund to develop the human capital and trained personnel necessary to bolster its investments in renewables in India. A particular focus would also be in cutting edge research and development.
Japan’s renewable companies hope to turn India into a hub for manufacturing, added Otaki.
Despite tough competition from firms like Phillips and GE, Japanese firms are also looking to break into the healthcare equipment market in India.
"There is a general sense now that the Indian market has become conducive for investment even by small Japanese firms and start-ups. This would be explored now and we expect business delegations coming from Japan to give concrete shape to fresh investments," the JETRO director said.
Otaki said the pandemic had been difficult for Japanese companies stationed in India that it resulted in the number of registered Japanese firms in the country dropping after a long gap in 2021.
However, Otaki said the situation had turned around considerably and that the number of Japanese companies in India is expected to grow further in the coming years.
According to a report by Asian Community News Network, the number of Japanese companies in India dropped marginally to 1,439 in 2021 from 1,455 in 2020.
Another key area of focus is the entry of small and medium enterprises into the Indian market. While the number of Japanese SMEs in India had continued to expand, Otaki said that there was a bias among Japanese investors toward investments in South-East Asia. Geographical proximity and awareness played a role in this process.
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