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Our Bureau

New Delhi , March 31

The Indian economic growth story has got Japanese companies sanguine about their future performance and investments in the country.

A survey of Japanese manufacturers, conducted by the Japan External Trade Organisation (JETRO) in ASEAN, India and China has found that 79.7 per cent of the respondents in India expected to post an operating profit in 2005, which is higher than 75.4 per cent in ASEAN and 73 per cent in Northeast Asia.

Meanwhile, nearly half of the respondents in ASEAN and 64.7 per cent in India expect improved year-on-year profit/loss performance in 2005. The survey further pointed out that 61.4 per cent of the Japanese companies cited increased sales in the domestic market as the driving force in their improved profitability in 2005.

Regarding the outlook for 2006, nearly half of respondents in ASEAN (47.5 per cent) expect improved profit/loss performance, mainly due to improved product efficiency and increased export sales. Compared to prospects for 2005, a smaller percentage of respondents in ASEAN expect increased sales in the domestic market in 2006, suggesting that Japanese manufacturers in the region will be looking more to exports for profits in the current year. This contrasts with India, where nearly 70 per cent of respondents expect higher sales in the domestic market, on the back of growing demand in the country.

India also seems to be emerging as an attractive production base for Japanese manufacturers.

On the parameter of most optimal location for establishing a production/sales base in the coming 5-10 years, while Japanese companies ranked Thailand highest, this was followed by Vietnam, India and China (in that order).

Further, a half of Japanese firms surveyed said that production costs in India are lower as compared to China. Indian engineers were also rated as superior to those in China.

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