Island of calm

Located roughly three hours from New Delhi & Neemrana, an industrial estate in Rajasthan, provides Japanese companies with largely uninterrupted power and water supplies. It also offers a streamlined license and approval process that bypasses local officials who might ask for bribes. These are rare luxuries in a country ranked 130th by the World Bank for ease of doing business.

The finance

Japan’s foreign direct investment in India has risen since the global financial crisis, reaching nearly $3.5 billion in 2016. Japan is India’s 10th largest trading partner with the bilateral relationship worth about $14.5 billion.

Japan has the technological know-how and several large corporations looking to access new markets. For the Japanese with a shrinking population at home, India offers a large market for it’s high quality products.

Analysis

Prime Ministers Narendra Modi and Shinzo Abe, both right-leaning nationalist leaders, embody a certain tight-knit relationship.

"They have what we don’t, and we have what they don’t," said Hiroshi Daikoku, a senior investment adviser to the Japanese external trade promotion agency, JETRO.

The project has been so successful that there are plans to offer other locations that can be dedicated to Japanese firms.

Japan is also looking to leverage Africa through India. India has excellent relationship with many countries in Africa & hence it would be a good conduit for Japanese products.

More than 90 percent of the land is allotted to the automotive sector. The project is being expanded to a separate 500-acre plot in Rajasthan.  

As Japanese capital flowed into India’s fast-growing economy, the successful industrial experiment at Neemrana — a collaboration between JETRO and the government of Rajasthan — has created about 10,000 factory jobs.

Assessment

Our assessment is that, attention is now turning to states which are able to govern better by providing more industry friendly policies. Power is a vital component for every form of manufacturing & any state that is able to generate surplus power will have a distinct advantage. It is necessary for India to string up partnership with Japanese companies to augment the Prime Minister Modi’s Make In India program. Japan has a long tradition of investing in research & development.