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'Japanese direct investment hit by sanctions against India'

BS Corporate Bureau

The psychologically negative effects of economic sanctions have resulted in Japanese direct investment in India declining for the past two to three years, Jiro Aiko, chairman of the standing committee of Japan India Business Co-operation Committee and advisor, Sony Corporation, said.

Speaking at a meeting organised by the Federation of Indian Chambers of Commerce and Industry, Aiko said, in spite of the decline in Japan's direct investment and flat Indo-Japanese trade, the number of Japanese companies investing in India had already exceeded 200.

Shinichi Kimura of Mitsui & Co Ltd, who was present, said the annual foreign investment in China amounts to about $40 billion, nearly 10 times that in India. He said this is mainly because of higher labour productivity in China.

Chinese businesses are operating on a much larger scale while Indian businesses are limited in investment because of the reservation for small-scale companies. Moreover, the Chinese government has carried out many infrastructure investment products during the past two decades successfully, he added.

On the inflow of low priced goods into India, Kimura underscored the fact that after China's admission into the WTO, Chinese products will have a threatening impact on international markets including that of India. "It is absolutely necessary for India to take steps to strengthen the competitiveness of Indian products and to improve the comprehensive productivity through revision of the Labour Act, improvement of infrastructure and individual private companies' self-help improvement.

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