Modi invites Japan to transform India into a major factory center

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Modi extends a red carpet invite to Japanese investors

Indian Prime Minister Narendra Modi embarked on his five-day visit to Japan on August 30 with the belief that India and Japan can make history by working together in several areas, like digital, solar energy, technology, and skills.

While inviting investments from Japan, Modi promised single-window clearances and speedy decision-making that’s non-discriminatory in nature. While stating that the era of “red tape” in India has been replaced by “red carpet” with ease of doing business and liberalization, Modi extended an open invitation to Japanese companies to consider India as a “competitive low-cost manufacturing hub.”

Japan FDI outflows

The Japan-India Investment Promotion Partnership

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Accordingly, after sufficient discussions and deliberations, the two leaders set a target to double Japan’s direct investment in India within five years. Shinzo Abe, prime minister of Japan, said that his country would invest $33.58 billion in public and private investments and financing over the next five years. The investments will primarily aim at projects in the field of infrastructure, clean energy, and skill development.

Exchange-traded funds (or ETFs) investing in India include the Wisdom Tree India Earnings Fund (EPI) and the Invesco PowerShares India ETF (PIN). These funds invest across varied sectors and in blue-chip Indian companies like Infosys (INFY), HDFC Bank (HDB), and Tata Motors (TTM). Both these ETFs would gain from India’s developmental progress.

Achieving the unrealized dream

Modi said on Saturday, August 30, “The India-Japan relationship was below potential and the two sides would strive to achieve in five years the unrealized hopes of five decades.”

India wants to emulate Japan in terms of quality, zero defect, and delivery systems while developing skills. The 3.5 trillion yen (or $33.58 billion) of investment from Japan to India, including Official Development Assistance (or ODA) during a five-year period, will fall under the aegis of the India-Japan Investment Promotion Partnership. The partnership will include development projects like infrastructure and building smart cities.

No Indian prime minister has been able to extract such a massive investment assurance from any foreign country in one single visit before.

Plus, the two sides have also decided to double the number of Japanese companies operating in India over the five-year investment period.

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