The year 2007 was ascribed as the Indo-Japan Friendship Year as the profile of the two countries expanded and bilateral economic relationship touched new heights. A survey conducted by Japan Bank for International Cooperation (JBIC) revealed that India has become the most favoured investment destination for long term Japanese investments.

While nearly 70 per cent of Japanese manufacturers regarded India as the most attractive country to do business in over the next 10 years or so, only 67 per cent preferred China. Russia came third, with a 37 per cent rating, followed by Vietnam at 28 per cent.

Japanese FDI in India

India's stable 8-9 per cent growth and rising foreign exchange reserves has sent out positive indicators globally. India's workforce, demography and technology have contributed immensely to its success in attracting investors. As a result the number of Japanese firms operating in India has grown by 50 per cent in recent years. In fact, Japan has been the sixth largest foreign direct investor in India during April 2000-December 2007, with an FDI inflow worth US$ 1.94 billion, and accounting for 4.34 per cent of the total FDI inflows.

Recent FDI projects involving Japan include:

• Honda, the Japanese auto major planning its foray into the compact car segment in India will expand its dealership network across 90 cities in the country and its production capacity to 1,60,000 units.
• Maruti Suzuki India Ltd (MSIL) plans to invest US$ 2.25 billion in India, most of it in research and development (R&D), warehousing, marketing, logistics and design.
• Canon-Japan's digital imaging technology giant is set to roll out its global flagship brand stores.
• Japanese car major Toyota is considering scaling its investments and capacity in the country by making India an export hub for their small car.
• Japan's second-largest lender Mizuho Financial Group has tied up with India's top bank State Bank of India.
• Nissan, the Japanese auto major, is working on an 'entry car strategy' to build its mass presence in India and select overseas markets.

Besides, India may also see an investment of US$ 10 billion from Japanese companies alone in the Delhi-Mumbai Industrial Corridor (DMIC) belt, where several small and medium enterprises (SMEs) in diverse sectors like electronic component, banking, water treatment, logistics and education among others are seriously considering long-term investments in the country.

In fact, in a bid to encourage more investment in India, Japan has decided to open its second business support centre in Mumbai, which would become operational in the next fiscal.