TOP JAPANESE SECTORS IN INDIA
The Japanese presence in India spans across a wide range of sectors including, but not limited to, automobiles, chemicals, textiles, and renewable energy. Japanese companies operating in these sectors have not only been immensely successful in India but have also reaped rich dividends on their investments made into the Indian market, reflecting the strong foundations and resilient nature of India’s economy. The broad success of Japanese firms in India has played an important role in maintaining and even enhancing the attractiveness of the Indian market within Japan’s business community. A brief snapshot of the top sectors in which Japanese firms operate in India:
Automobile and auto components industry:
India is the 4th largest automotive market as well as the 5th largest auto-producing nation in the world, with Japanese auto giants such as Maruti Suzuki and Mitsubishi, constituting a large chunk of this production. With a growth rate of 18.3 per cent in 2017-18, the Indian automobile industry is only set to grow stronger.
India is currently among the top five consumers of polymers and 4th largest producer of agro-chemicals in the world and this sector contributed 9 per cent of the total FDI inflows in India in 2018. With major Japanese chemical firms such as Kansai Nerolac, Mitsui Chemicals and Sumitomo Chemicals present in India, the market is increasingly lucrative with an expected CAGR of over 10 per cent in the next five years.
Food processing industry:
India offers a huge market for Japanese food processing industries to grow and expand because of India’s vast size, offering enormous potential for Japanese firms. India is not only the largest producer of milk in the world but also the second-largest global producer of horticultural crops besides being the world’s largest producer, consumer, and exporter of spices. With booming foreign direct investment levels, this sector has attracted a growing number of Japanese firms present in India.
Medical devices industry:
One of the foremost areas of bilateral collaboration, the medical devices market in India is currently estimated to be worth USD 10 Bn in 2019 with an estimated CAGR of 15.8 per cent. Despite being the fourth largest market in Asia, India’s domestic medical devices industry is relatively nascent- with an 80 per cent import dependency. These factors provide the right environment for better utilization of Japanese technology to ramp up the production of quality, affordable medical devices in India. Furthermore, Japanese medical devices firms are also keenly looking to tap into the vast opportunities offered by India’s large size.
Electronic system design and manufacturing (ESDM) industry:
In 2017-18, India’s electronics industry was sized at USD 112 Bn with its forecasted size set to become worth USD 400 Bn by 2023-2024 with a CAGR of 26.7 per cent. India’s consumer electronics is one of the fastest-growing segments within the electronics sector, offering much scope for the superior Japanese electronics industry to expand its presence in India. Recognizing this potential, an MoU was signed between India Electronics and Semiconductor Association (IESA) and Asia Semiconductor Trading Support Association (ASTSA) from Japan to jointly promote ESDM industry collaborations, to find synergies that can lead to the overall empowerment of the electronics ecosystem in India and Japan.
Consumer goods industry:
India’s fast-growing middle class and a rising GDP have contributed to making India a rapidly growing Fast-Moving-Consumer-Goods (FMCG) market estimated to be worth USD 104 Bn by 2020 making it the world’s 5th largest consumer durables market at a CAGR of 14 per cent. In India’s consumer goods sector, Japanese giants such as Panasonic and Daikin have witnessed nationwide presence and burgeoning profits, in a clear indication of economic and business successes enjoyed by Japanese companies in India.