“Ever since India decided to globalise, concentrated effort was made to attract Japanese participation through foreign direct investment. However, response from Japan has been rather subdued,” the well-known think tank said.
The paper, which attempted to gain “some insight into this reluctance of Japanese investors,” found that the businessmen from Japan not only seek economic ties but also commitment and trustworthiness. They also tend to test waters by giving limited work of setting unachievable targets to their overseas partners.
Thus, the Indian partners should have patience and trust, the paper said.
Though FDI from Japan has shown large increase from US$85 million in 2006-07 to US$950 million during April-October 2009-10, these inflows do not look impressive when compared to other countries like Singapore, the US and Germany.
The ICRIER study said India should take measures like setting up of a regulatory body to check spurious products from entering the market to attract more investment from Japan.
“It is necessary to have a vigilant regulatory body to check cheap and spurious products from entering the market. This will give a fillip to Japanese investors ...,” it said.
The notable Japanese firms which have set up their wholly-owned or joint ventures in India include Honda, Mitsubishi and Toyota.
Press Trust of India