The Japan-India Vision 2025 initiative has become a cornerstone of bilateral relations, laying the groundwork for deeper economic, industrial, and diplomatic cooperation between the two nations. With a target of 5 trillion yen in Japanese investments by 2027, the Vision 2025 framework aims to further solidify Japan’s role as a key economic partner for India. This growing collaboration reflects a significant shift, particularly in the sectors attracting Japanese investment, including IT, electronics, and manufacturing.
To gain insight into how this initiative has reshaped Japan’s investment landscape in India, Bridges spoke with Takashi Suzuki, Chief Director General of the Japan External Trade Organization (JETRO) in New Delhi. Mr. Suzuki shared his perspective on the evolving partnership, the challenges faced by new entrants, and the importance of fostering stronger people-to-people exchanges to unlock the full potential of the Japan-India relationship.
Bridges: How has the Japan-India Vision 2025 initiative influenced Japanese investment in India? What successes can you highlight, and what challenges remain in realizing its goals?
Takashi Suzuki: Well, the Vision 2025 initiative, primarily a diplomatic effort, has certainly influenced the broader bilateral relationship. However, from a business perspective, the post-COVID era has seen a significant shift in Japanese investment in India.
Historically, the automotive sector, particularly Suzuki Motor Corporation, has been a major driver of Japanese investment. However, in recent years, we’ve witnessed diversification into sectors like IT and electronics. Companies like Rakuten and Fujitsu have established operations in India, particularly focusing on software development and R&D.
While this is encouraging, challenges persist. India’s protectionist trade policies can hinder market access for newcomers. Additionally, navigating India’s complex regulatory environment can be daunting. To mitigate these challenges, Japanese companies increasingly seek local partnerships.
While partnerships with large Indian conglomerates are common, Japanese companies are increasingly recognizing the value of partnering with mid-sized Indian firms. These partnerships can provide access to local markets, regulatory expertise, and specialized knowledge.
Takashi Suzuki, Chief Director General of the Japan External Trade Organization office in New Delhi
To further strengthen the bilateral relationship, increased people-to-people exchange is crucial. Currently, the level of interaction between the two countries is notably lower compared to Japan-China relations. This imbalance presents an opportunity to foster deeper understanding and collaboration.
While the existing Japanese companies are quite bullish about India, new entrants are facing challenges. What industries, apart from manufacturing and digital, are showing interest in India?
The electronics industry has been eyeing India for some time. While large-scale manufacturing hasn’t taken off yet, companies are establishing sales offices and service centers. The semiconductor industry is another area of interest, especially with the recent government initiatives.
Food and beverage companies, particularly Japanese breweries, are also exploring opportunities in India. However, India’s protectionist trade policies can make market entry difficult, especially for exporters.
Are Japanese companies primarily seeking partnerships with large Indian conglomerates, or are they also engaging with mid-sized firms?
While partnerships with large Indian conglomerates are common, Japanese companies are increasingly recognizing the value of partnering with mid-sized Indian firms. These partnerships can provide access to local markets, regulatory expertise, and specialized knowledge.
By fostering stronger people-to-people ties, we can unlock the full potential of the Japan-India partnership.
Are there any specific Indian companies that are actively seeking Japanese cooperation?
Several Indian automotive companies have successful joint ventures with Japanese firms. They can provide valuable insights into the challenges and opportunities of such partnerships.
Finally, you mentioned the importance of people-to-people exchange. Could you elaborate on that?
The current level of people-to-people exchange between Japan and India is significantly lower compared to Japan-China. This imbalance hinders deeper cultural understanding and business collaboration. To address this, initiatives such as student exchange programs and talent recruitment programs can be beneficial.
By fostering stronger people-to-people ties, we can unlock the full potential of the Japan-India partnership.
