The land of the rising sun is smiling on India. Companies from Japan, known for a conservative long-term approach, are building their footprint in India, apparently emboldened by government policy measures.
Electronic companies including tech giants Panasonic, Sony, Toshiba and Hitachi and auto majors such as Toyota, Honda, Nissan and Suzuki have chalked out expansion and investment plans for India. These plans include elaborate investment strategies and a volley of product launches to take on competitors.
“We are betting big on India for growth,” said Manish Sharma, managing director, Panasonic India. The company expects gross revenues of $3.7 billion (R20,500 crore) from India alone by the end of 2015-16, a 181% growth from 2012-13.
Sony has similar plans for India. “India is a focus market for us,” says Kenichiro Hibi, managing director, Sony India. The company expects its India revenues to grow by at least 30% in 2012-13 against the R6,313 crore garnered in 2011-12.
Diplomats say that India is critical for Japan in balancing the rising power of China in Asia. Japan’s business leaders, who are known to take their time before a decisive move, seem to be walking that talk.
Consider this: Honda recently announced investment worth R2,500 crore to operationalise its second car factory in the country with a capacity of 120,000 units per annum. Suzuki plans to invest over R10,000 crore over the next five years towards expanding its capacity from the existing 1.2 million units per annum to 2 million units and beyond.
Panasonic has earmarked R1,500 crore for marketing and advertisement to be spent over the next three years. Sony is also strengthening its retail network in India.
“So far we have operated in only about 10% of the Indian passenger car industry but now we are all set to expand our business in the country with our line-up of diesel cars,” said Hironori Kanayama, president and CEO, Honda Cars India Ltd.
“Maruti today is the cherry on Suzuki’s cake,” said RC Bhargava, chairman, Maruti Suzuki India Ltd. “There is little scope for growth in Japan. It is costly to export from there. Suzuki has to look at India for growth and also as a base for exports of more models.”
The importance of Maruti in Suzuki’s global operations can be gauged by the fact that it now accounts for almost 40% of the firm’s global sales and contributes almost a fourth of its revenues. Since 2007-08, Maruti has been selling more cars in India than Suzuki in its home market Japan.