Striking a note of caution about India’s “environment for investment,” a Minister in Japanese Prime Minister Shinzo Abe’s office said the government must roll out economic reforms, build up infrastructure and cut red tape if the $35 billion promised during Prime Minister Narendra Modi’s visit to Japan were to be actualised. “So long as there is a step-by-step forward movement, I think the expectations can be reached,” said State Minister Yasutoshi Nishimura in an exclusive interview to The Hindu.
“Japanese companies will move forward with investment, but only if there is a visibility with regard to these reforms.”
He clarified that the $35 billion or 3.5 trillion yen committed was a combination of government outlay for Indian transport infrastructure and the projected expectation from private companies. Much of the public investment will be in the $100 billion Delhi-Mumbai industrial corridor, metro transport, and bullet train technology.
Speaking at the India Global Forum organised by IISS and ORF, Mr. Nishimura had also hit out at the lack of infrastructure, including transport and power, saying Maruti Suzuki’s Indian plants had to depend on private generators.
“Despite the quite large investment to date, infrastructure development is not catching up with rapid economic growth. This is a major bottleneck for growth,” he added.
Government’s initiatives forward-looking: Nishimura
At the India Global Forum on Sunday, Finance Minister Arun Jaitley had conceded that building investor confidence was the government’s big worry, saying, “One of the principal challenges is to restore confidence in the Indian economy, to expand economic activity and increase the growth rate.”
Japan was the first country to commit major investment to Mr. Modi’s economic outreach, but is by no means the biggest investor in India. According to industry reports, India accounts only for 1.2% of Japan’s FDI, as opposed to 8.8% for China. Also, India-Japan trade accounts for just 2% of India’s total trade and 1% of Japan’s.
Conceding that the government’s initiatives including the setting up of a special “Japan-plus” desk at the Commerce Ministry’s Department of Investment Promotion were “forward-looking,” Mr. Nishimura told The Hindu, “We very clearly see the government’s desire for promoting and encouraging investment. In fact many companies are thinking once again of investing in India. What they have been asking for is an improvement in administrative procedures in India.”