Japan Inc buys the India story

India has become the third preferred destination after China and Thailand for investment by Japanese companies.

A Japan Bank for International Cooperation's (JBIC) survey has revealed that India has moved two notches to reach the third slot in Japanese investment preference.

The survey was conducted among 595 Japanese companies. In the case of India, the number of companies with no specific business plans for these countries exceeds the number of companies that actually have such plans.

"Therefore, the ranking is considered to be a reflection of anticipations for future potentials, rather than realistic investment possibilities," says the survey. This is not the case with China, Thailand and the United States.

Of the 112 companies that responded in favour of India, 82.1 per cent cited growth potential of the market as the main reason for it to be a promising nation. The other primary advantages were inexpensive labour force and excellent human resources.

The main issues identified by respondents for India were under-development of infrastructure, insufficient information on investment climate and instability of security and social conditions.

Among the countries and regions that fell in the ranking as compared to the last survey, Indonesia saw the largest drop in votes. This is the second year India climbed positions. It had improved by one position in the 2003 survey.

Many companies in all the sectors intending to strengthen or expand their overseas operations had positive attitudes towards the eastern and southern regions of China for the next three years.

Many saw economic growth in China continuing until 2010 though some felt it will end by 2008. JBIC will provide support for overseas business activities of Japanese firms based on the findings of this survey.

These firms are typically those which are exposed to increasingly intense global competition and to improving the investment climate in individual countries and regions by conducting a dialogue with foreign governments and their agencies.