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Concern over falling Japanese FDI in India

Our Bureau

NEW DELHI, July 27

DIRECT investments from Japan to India has been declining over the past two to three years and trade between the two countries has been flat, according to Mr Jiro Aiko, Chairman of the Standing Committee of Japan-India Business Cooperation Committee (JIB CC), and Advisor, Sony Corporation.

Speaking at the 23rd joint meeting of the standing committees of India-Japan Business Cooperation Committees organised by FICCI here on Friday, he said that ``as a result of the psychologically negative effects of economic sanctions, direct investment fr om Japan to India has been declining for the past two to three years.''

He, however, added that despite this situation, there are more than 200 Japanese companies which have entered the Indian market and in recent years the interest in IT and human resources is witnessing considerable expansion.

Later, in his presentation, Mr Shinichi Kimura of Mitsui & Co Ltd pointed out that the annual foreign investment in China amounts to about $40 billion, nearly 10 times as much as that in India, with no less than 4,400 Japanese businesses making an aggreg ate investment of $22 billion in China, almost 10 times as much as their investment in India.

He concurred that this is mainly because of higher labour productivity in China. Chinese businesses are operating on a much larger scale while Indian businesses are limited in investment because of the reservation for small-scale companies. Moreover, the Chinese Government has carried out many infrastructure investment products during the past two decades successfully.

Talking about the inflow of low-priced goods into India, Mr Kimura underscored the fact that after China's admission into WTO, Chinese products will have a more threatening impact on international markets, including India.

``It is absolutely necessary for India to take steps to strengthen the competitiveness of Indian products and to improve the comprehensive productivity through revision of the Labour Act, improvement of infrastructure and individual private companies of self-help improvement,'' Mr Kimura said.

Pic.: WAKE-UP CALL: Mr Vikram M. Thapar, Chairman of the India-Japan Business Cooperation Committees, addressing the 23rd joint meeting of the IJBCC standing committees along with Mr Jiro Aiko, Chairman of the Standing Committee of Japan-India Business C ooperation Committee, in New Delhi on Friday.

Picture by Kamal Narang