24.5.15

Japan investments in India

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$35 billion to be invested over the next 5 years.


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Japan identifies 11 sites to set up industrial townships in India

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By Dilasha Seth of The Times of India


Shinzo Abe's government is firming up its promise to help Prime Minister Narendra Modi build India's infrastructure and promote domestic manufacturing as it doubles its investment in the country.

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Japan has identified 11 sites to set up industrial townships in India, which would serve as hubs for investments into the country. These include Tumkur in Karnataka, Ghilot in Rajasthan, Mandal in Gujarat and Supa in Maharashtra. Japan will also provide soft-skills training to Indian workers in the manufacturing sector to help bridge the demand-supply gap. "Japan aims to double its investment in India to about $35 billion in the next five years. The move would help strengthen bilateral economic ties. They are already the primary investors in our economic corridors," said a government official, adding that the details are being firmed up. The move will strengthen domestic manufacturing, support the 'Make in India' campaign and ensure transfer of technology.

The government plans to give concessions to Japanese companies in the industrial townships, equivalent to at least what is offered to units in special economic zones and the proposed National Investment & Manufacturing Zones. "We are yet to work out the investment incentives for the companies, but it will definitely not be lower than what is under the prevailing policy framework including SEZs and NIMZs, like what has been announced for the Chinese industrial parks as well," said the official.
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Special economic zones are allowed duty-free imports and 100% tax-free export income for the first five years, 50% for the next five years and 50% of the ploughed back export profit for the subsequent five years. NIMZs, under the National Manufacturing Policy, provide tax incentives to small and medium enterprises.
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The development of the townships will be assisted by the respective state governments, the Department of Industrial Policy & Promotion and Japan's Ministry of Economy, Trade & Industry. Japan is the fourth-biggest foreign investor in India, contributing 7% to the total FDI inflows since April 2000, according to the DIPP. Japan brought in $1.7 billion worth of FDI in 2013-14 and $18 billion between April 2000 and February 2015. The other areas identified for the townships include Ponneri in Tamil Nadu, Neemrana in Rajasthan, Jhajjar in Haryana and the Integrated Industrial Township in Greater Noida.
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Japan will extend its industrial township advance soft-skills development project to impart training to workers in the manufacturing sector.
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"The sectors will be wide-ranging, right from auto components to textiles, food processing and engineering," the official said. Japanese Minister for Trade Yoichi Miyazawa met Indian Minister of State for Commerce and Industry Nirmala Sitharaman in New Delhi last week and they signed a five-point agenda for the development of Japanese industrial townships, promotion of investment and infrastructure development, further development and cooperation in the IT sector, enhancing cooperation in strategic sectors and advance Asia-Pacific economic integration. Japan has invested $4.5 billion in the first stage of the Delhi-Mumbai industrial corridor through lending by Japan International Cooperation Agency and Japan Bank for International Cooperation. They together hold 26% equity in the project.