rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Japan's ripple effect may reach India

Japan's ripple effect may reach India

Last updated on: March 15, 2011 10:27 IST

Japan's ripple effect may reach India

     Next

Next
Malini Bhupta in Mumbai

On the face of it, India's exposure to Japan looks rather limited as only 2.4 per cent of India's total imports ($3.9 billion) in the first half of FY11 have come from Japan.

A large portion of the imports would be auto components. Automakers such as Nissan, Toyota and Honda are among the worst hit, according to Nomura's analysts in Japan.

The imports from these companies will be affected as their factories are expected to reopen by the end of April.

Click NEXT to read on


Image: Nissan Micra.

     Next

Japan's ripple effect may reach India

Prev     Next
Prev

Next
According to RBS, Toyota postponed the opening of its second plant in Bangalore, but the production of Etios Sedan (developed for the Indian market) will not be affected as engines and transmissions are shipped over a medium- to long-term basis.

There's good news for Maruti Suzuki, as the parent company in Japan is the least impacted by the crisis. Also, a few ports in southern Japan have been affected, so exports may continue to resume after the initial hiccups.

Click NEXT to read on


Image: Toyota Etios.

Prev     Next

Japan's ripple effect may reach India

Prev     Next
Prev

Next
Japan also represented 2.4 per cent of India's exports ($2.5 billion) in the first half of FY11, comprised primarily of bulk materials. Thus, iron ore exports from India could be impacted in the near term.

While the impact on trade may not be much, a direct consequence of the crisis in Japan is likely to slow down capital flows from Japan.

As Japan looks at rebuilding its economy, it will look at "faster repatriation of funds from Japanese subsidiaries in other countries and slower flow of foreign direct investments," said an analyst from Nomura in Japan during a conference call on Monday.

Click NEXT to read on


Image: Residents walk between grid locked vehicles on their way home among chaotic traffic in central Tokyo
Photographs: Toru Hanai/Reuters.
Prev     Next

Japan's ripple effect may reach India

Prev     Next
Prev

Next
While it's too early to predict how the markets and portfolio flows will move in the short term, economists and analysts in Japan seem to be unanimous the country will consume a lot more commodities like coal, iron ore, crude oil, among others, in the coming months.

While the Japanese government has stated that the plants are safe, they may take some time to resume production.

Click NEXT to read on


Image: Demand for more commodities.

Prev     Next

Japan's ripple effect may reach India

Prev     More
Prev

More
Analysts say until all reactors start, demand for diesel and LNG will increase, contrary to projections which saw Japan's demand for oil falling.

As rebuilding activity starts in a few months, Japan will consume more commodities and this will push up the already soaring prices in the world market.

Says Sonal Varma, economist at Nomura India, "If Japan's consumption of commodities such as coal, steel and oil goes up, prices may move higher and that may impact India in a negative way."


Image: Demand for more diesel.

Prev     More
Source: