The government of Japan is firming up its promise to help build India’s infrastructure and promote domestic manufacturing in the country. Japan aims to double its investment in India to about $35 billion in the next five years. The move would help strengthen bilateral economic ties. Japan has identified 11 sites to set up industrial townships in India, which would serve as hubs for investments into the country. These include Tumkur in Karnataka, Ghilot in Rajasthan, Mandal in Gujarat and Supa in Maharashtra. Japan will also provide soft-skills training to Indian workers in the manufacturing sector to help bridge the demand-supply gap. The move will strengthen domestic manufacturing, support the ‘Make in India’ campaign and ensure transfer of technology.
The government plans to give concessions to Japanese companies in the industrial townships, equivalent to at least what is offered to units in Special Economic Zones (SEZ) and the proposed National Investment & Manufacturing Zones (NIMZ). Special economic zones are allowed duty-free imports and 100% tax-free export income for the first five years, 50% for the next five years and 50% of the ploughed back export profit for the subsequent five years. NIMZs, under the National Manufacturing Policy, provide tax incentives to small and medium enterprises. The development of the townships will be assisted by the respective state governments, the Department of Industrial Policy & Promotion and Japan’s Ministry of Economy, Trade & Industry.
According to the Department of Industrial Policy and Promotion (DIPP), Japan is the fourth-biggest foreign investor in India, contributing 7% to the total FDI inflows since April 2000,. Japan brought in $1.7 billion worth of FDI in 2013-14 and $18 billion between April 2000 and February 2015. The other areas identified for the townships include Ponneri in Tamil Nadu, Neemrana in Rajasthan, and Jhajjar in Haryana and the Integrated Industrial Township in Greater Noida. Japanese Minister for Trade Yoichi Miyazawa met Indian Minister of State for Commerce and Industry Nirmala Sitharaman in New Delhi and they signed a five-point agenda for the development of Japanese industrial townships, promotion of investment and infrastructure development, further development and cooperation in the IT sector, enhancing cooperation in strategic sectors and advance Asia-Pacific economic integration. Japan has invested $4.5 billion in the first stage of the Delhi-Mumbai industrial corridor through lending by Japan International Cooperation Agency and Japan Bank for International Cooperation.