India has become an attractive destination for Japanese players, with a few of them entering the country through technical collaboration to be part of the growth story. The recent entrant to join the race is JFE Steel Corporation, the world?s sixth-largest steel producer, which recently entered India in a technical collaboration with JSW Steel Ltd.
Others include Japan’s steel major Sumitomo Metals Ltd, which is in technical tie-up with India?s Bhushan Steel for its upcoming greenfield project in Orissa. Similarly, Essar Steel had also in 2008 effected a technical tie-up with Japan’s Kobe Steel to gain operational technology to manufacture higher quality steel products.
Moreover, Tokyo-based Japan Steel Works is also reported to be focusing on emerging economies like India and has set up a marketing and sales office here. Experts say the main attraction in India is the easy availability of raw material, which is luring companies to the country. ?India will be an attractive joint venture (JV) destination for Japanese companies as they have the technology and large amounts of cash with them, but no raw material security,? said a metal analyst, who does not wish to be identified.
If experts are to be believed, a technical tie-up is just an entry point. The real truth is that the foreign players enter India by initially collaborating on certain aspects and then bring finance for the steel projects here or acquire stake in the company. Global giants like Arcelor Mittal and Posco would prefer setting up a greenfield plant in India, whereas others may prefer entering India in the form of joint ventures.
JSW Steel is looking at selling as much as 40% in its upcoming 10 million-tonne steel unit in West Bengal to its overseas partner JFE Steel. On technical tie-up, the partnership will allow it access to JFE?s technology for producing steel used in automobiles.
JFE Steel CEO Hajime Bada had said, ?We would like to secure a local production base in India with the cooperation of JSW Steel. Cooperation in the automotive segment is just the first step of our future collaboration.?
