Data from the Japan Chamber of Commerce & Industry show Tamil Nadu accounts for 40% of all Japanese investment in India
After attracting various medium and big enterprises from Japan, Tamil Nadu is gearing up to draw small enterprises from that country. To support these enterprises, the state government has said it would provide various incentives, including a special package and exclusive business clusters.
It is building a Rs 3,500-crore integrated township along with ready built factories in the Sri City special economic zone (SEZ). The township, estimated to draw investment of Rs 15,000 crore, would be developed in partnership with a Japan consortium. The state has said it would also bring out a special package for micro, small and medium enterprises.
"All set for the next waves of investments from Japan…this time, it would be led by small enterprises," said Shinya Fujii, director general, Japan External Trade Organisation, managed by the ministry of economy, trade & industry, government of Japan. Japanese enterprises were keen on India, as the market for their products here was good, he added. Also, as manufacturing costs here were low, they could also cater to export markets. A representative from the Japanese government said the fact that about 400 Japanese companies had already invested in Tamil Nadu didn't come as a surprise. And, this trend was likely to continue, he added.
Data from the Japan Chamber of Commerce & Industry show Tamil Nadu accounts for 40 per cent of all Japanese investment in India; most of this was in and around Chennai.
Of the investment of Rs 20,350 crore by the 120 members of the chamber, Rs 8,320 crore went towards Tamil Nadu.
Four years ago, there were 77 Japanese projects in the state; as of October 2012, the number rose to 344. During the same period, the number of Japanese projects across the country rose only 125 per cent to 1,804, Fujii said.
Major Japanese projects in Tamil Nadu include a Rs 4,500-crore car manufacturing facility set up Nissan and Renault, Komatsu's earth-moving equipment project and Hitachi's investment in turbines.
Why Tamil Nadu? According to a survey of 1,000 companies by Japan Bank of International Cooperation, India is seen as the second-most favoured destination for investment, after China.
For long-term investment, India was seen as the most promising country.
Fujii says, "Though Japanese companies are present in other clusters such as Gujarat, of all states, Tamil Nadu has the largest Japanese cluster."
In a recent interview, Masanori Nakano, the Japanese consul general in Chennai, said the location of the state and the availability of ports (two in Chennai and one in the state's southern tip) made Tamil Nadu an attractive destination.
In terms of manpower, Chennai draws many companies due to the high number of engineering graduates here. Besides the favourable industrial climate and infrastructure, Chennai also offers a potential market for Japanese products.
Fujii said Tamil Nadu was one of the most important destinations for Japanese companies, as it allowed these firms to cater to the Indian, as well as international markets at competitive prices. He added as the state was close to Indonesia, Thailand and other Asian countries where Japanese companies had set up bases, it was easy to coordinate work from here. Besides, the Indian government has free trade agreements with most countries in the Association of Southeast Asian Nations. He added labour costs in Tamil Nadu were about 20 per cent lower than in other regions.
Besides, the cultures and languages of Japan and Tamil Nadu have various similarities and parallels.
In the automobile sector, Tamil Nadu had outperformed the rest of the country and emerged as the preferred investment destination for Japanese investors in this segment, said L Ganesh, chairman of the Rane Group and former chairman, Confederation of Indian Industry (southern region). The automobile segment accounts for about 60 per cent of Japanese foreign direct investment in the state.
Masashi Iwanaga, director (financial cooperation division), ministry of economy, trade & industry of Japan, said the market in south India, especially in Chennai and Bengalaru, had immense investment potential, owing to strong economic fundamentals, a large and expanding market, skilled human resources and the facilities to export to various continents.
SMEs: The next wave Fujii says the round of Japanese investments in Tamil Nadu would be led by small enterprises. "While the technology would be from Japan, the manufacturing capability would be that of a joint venture partner based here," he says. Later this year, Japan External Trade Organization (Jetro) would hold various events in the automobile, information technology (IT) and electronics segments, he added.
Soichi Yoshimura, executive vice-president, Jetro, said through the last few years, Japanese investors were scouting for opportunities in engineering and machinery, electronics, logistics, infrastructure, trade and IT.
The Tamil Nadu Investment Promotion Programme was improving the investment climate and inviting foreign investors to Tamil Nadu, said a state government official. He added the entity aimed to address various concerns of investors and facilitate an investment of about Rs 770 crore through the next three years.
Challenges Fujii said besides stringent regulations, infrastructure - connectivity to ports, power shortages, lack of industrial parks and high costs of starting a business - was also a key challenge for Japanese firms.
A state government official said the implementation of a few state and central infrastructure projects was being fast-tracked. He added Prime Minister Manmohan Singh had directed the authorities concerned to improve infrastructure in the state.
Initiatives On the Old Mahabalipuram Road, 55 km south of Chennai, an industrial township is being developed for Japanese companies by Ascendas and a Japanese consortium. This 1,600-acre park would house about 60 Japanese companies. The project would cater to Tamil Nadu's largest industrial cluster, Oragadam-Sriperumbudur.
According to reports, Sojitz-Motherson is planning to set up an industrial park for small and medium enterprises from Japan in Kanchipuram.
It is expected about 50 Japanese companies would invest here. Sri City, south India's largest SEZ, is setting up a new cluster, for which it has adopted the ready-built-factories model. The model would not only help companies to reduce capital expenditure, but also help them start operations early. Ravindra Sannareddy, managing director, Sri City, said the concept was similar to what the IT industry had adopted - the plug and play concept, through which buildings were developed for IT companies.
After attracting various medium and big enterprises from Japan, Tamil Nadu is gearing up to draw small enterprises from that country. To support these enterprises, the state government has said it would provide various incentives, including a special package and exclusive business clusters.
It is building a Rs 3,500-crore integrated township along with ready built factories in the Sri City special economic zone (SEZ). The township, estimated to draw investment of Rs 15,000 crore, would be developed in partnership with a Japan consortium. The state has said it would also bring out a special package for micro, small and medium enterprises.
"All set for the next waves of investments from Japan…this time, it would be led by small enterprises," said Shinya Fujii, director general, Japan External Trade Organisation, managed by the ministry of economy, trade & industry, government of Japan. Japanese enterprises were keen on India, as the market for their products here was good, he added. Also, as manufacturing costs here were low, they could also cater to export markets. A representative from the Japanese government said the fact that about 400 Japanese companies had already invested in Tamil Nadu didn't come as a surprise. And, this trend was likely to continue, he added.
Data from the Japan Chamber of Commerce & Industry show Tamil Nadu accounts for 40 per cent of all Japanese investment in India; most of this was in and around Chennai.
Of the investment of Rs 20,350 crore by the 120 members of the chamber, Rs 8,320 crore went towards Tamil Nadu.
Four years ago, there were 77 Japanese projects in the state; as of October 2012, the number rose to 344. During the same period, the number of Japanese projects across the country rose only 125 per cent to 1,804, Fujii said.
Major Japanese projects in Tamil Nadu include a Rs 4,500-crore car manufacturing facility set up Nissan and Renault, Komatsu's earth-moving equipment project and Hitachi's investment in turbines.
Why Tamil Nadu? According to a survey of 1,000 companies by Japan Bank of International Cooperation, India is seen as the second-most favoured destination for investment, after China.
For long-term investment, India was seen as the most promising country.
Fujii says, "Though Japanese companies are present in other clusters such as Gujarat, of all states, Tamil Nadu has the largest Japanese cluster."
In a recent interview, Masanori Nakano, the Japanese consul general in Chennai, said the location of the state and the availability of ports (two in Chennai and one in the state's southern tip) made Tamil Nadu an attractive destination.
In terms of manpower, Chennai draws many companies due to the high number of engineering graduates here. Besides the favourable industrial climate and infrastructure, Chennai also offers a potential market for Japanese products.
Fujii said Tamil Nadu was one of the most important destinations for Japanese companies, as it allowed these firms to cater to the Indian, as well as international markets at competitive prices. He added as the state was close to Indonesia, Thailand and other Asian countries where Japanese companies had set up bases, it was easy to coordinate work from here. Besides, the Indian government has free trade agreements with most countries in the Association of Southeast Asian Nations. He added labour costs in Tamil Nadu were about 20 per cent lower than in other regions.
Besides, the cultures and languages of Japan and Tamil Nadu have various similarities and parallels.
In the automobile sector, Tamil Nadu had outperformed the rest of the country and emerged as the preferred investment destination for Japanese investors in this segment, said L Ganesh, chairman of the Rane Group and former chairman, Confederation of Indian Industry (southern region). The automobile segment accounts for about 60 per cent of Japanese foreign direct investment in the state.
Masashi Iwanaga, director (financial cooperation division), ministry of economy, trade & industry of Japan, said the market in south India, especially in Chennai and Bengalaru, had immense investment potential, owing to strong economic fundamentals, a large and expanding market, skilled human resources and the facilities to export to various continents.
SMEs: The next wave Fujii says the round of Japanese investments in Tamil Nadu would be led by small enterprises. "While the technology would be from Japan, the manufacturing capability would be that of a joint venture partner based here," he says. Later this year, Japan External Trade Organization (Jetro) would hold various events in the automobile, information technology (IT) and electronics segments, he added.
Soichi Yoshimura, executive vice-president, Jetro, said through the last few years, Japanese investors were scouting for opportunities in engineering and machinery, electronics, logistics, infrastructure, trade and IT.
The Tamil Nadu Investment Promotion Programme was improving the investment climate and inviting foreign investors to Tamil Nadu, said a state government official. He added the entity aimed to address various concerns of investors and facilitate an investment of about Rs 770 crore through the next three years.
Challenges Fujii said besides stringent regulations, infrastructure - connectivity to ports, power shortages, lack of industrial parks and high costs of starting a business - was also a key challenge for Japanese firms.
A state government official said the implementation of a few state and central infrastructure projects was being fast-tracked. He added Prime Minister Manmohan Singh had directed the authorities concerned to improve infrastructure in the state.
Initiatives On the Old Mahabalipuram Road, 55 km south of Chennai, an industrial township is being developed for Japanese companies by Ascendas and a Japanese consortium. This 1,600-acre park would house about 60 Japanese companies. The project would cater to Tamil Nadu's largest industrial cluster, Oragadam-Sriperumbudur.
According to reports, Sojitz-Motherson is planning to set up an industrial park for small and medium enterprises from Japan in Kanchipuram.
It is expected about 50 Japanese companies would invest here. Sri City, south India's largest SEZ, is setting up a new cluster, for which it has adopted the ready-built-factories model. The model would not only help companies to reduce capital expenditure, but also help them start operations early. Ravindra Sannareddy, managing director, Sri City, said the concept was similar to what the IT industry had adopted - the plug and play concept, through which buildings were developed for IT companies.
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