Corridor to lure Japan Inc

Written by Arun S | New Delhi, Aug 21 | Updated: Aug 22 2007, 06:29am hrs
India could soon become Japans manufacturing hub. That hope lies at the core of the Delhi-Mumbai Industrial Corridor (DMIC) project, to be firmed up between New Delhi and Tokyo during the visit of Japanese Prime Minister Shinzo Abe this week. The massive project is expected to entice a large number of small & medium enterprises (SMEs) from Japan to set up units at each of the six industrial regions that will be spread across the 1,483-km corridor.

Top government officials told FE that most of the industrial regions have been selected keeping in mind the strength of Japanese SMEs in automobile and engineering industries. Work on two world-class automobile testing facilities in Haryana and Maharashtra have already begun.

The Cabinet had, last Thursday, approved the DMIC project. The corridor will pass through Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra. It will entail an investment of around $100 billion on infrastructure.

Though the sources said the industrial regions should not be seen as Japanese industrial hubs, they said Tokyo was very keen to leverage Indias abundant supply of skilled labour and expanding markets. For India, the industrial zones are a great opportunity to ratchet up the manufacturing sectors skill-sets to match the demands from Japanese SMEs. These SMEs will be assured world-class infrastructure, besides airport and harbour connectivity.

Japanese SMEs want to just focus on their areas of core competence and not worry about infrastructure. They are nimbler than large corporations in relocating. Besides, the large ones can take care of themselves, one official said. The DMIC project would be launched in 2008 and completed by 2015.

Another official associated with the project said the Japan External Trade Organisations business support centres in India would facilitate the transfer of the SMEs manufacturing facilities.

Japans SMEs account for over 90% of the countrys industrial production and more than half its exports. India is already a big recipient of FDI from Japan. Between 1991 and April 2007, Japan accounted for $2.65 billion, or 5.45%, of total FDI into India.