This points to the fact that the country has emerged as an important investment destination after China.
Data with the Department of Industrial Policy and Promotion reveals that between April 2005 and July 2008, Japan Inc pumped in 50 per cent of the total investments inflows between April 2000 and July 2008.
In fact, between June and October this year, Japanese companies said they would pump in $8 billion.
Experts say this is not a knee-jerk reaction by the Japanese, who are known to be very meticulous with their investments.
"There is an unwritten strategic decision by Japanese companies to direct more investments into India as they want to diversify.
"They do not want to put investments in China, where they have already pumped in a lot," says Ajay Dua, former secretary, Department of Industrial Policy and Promotion, and advisor to a couple of Japanese MNCs.
Agrees Seiji Ota, executive director, BMR Advisors. Ota said the Japanese found it too risky to direct all their investments to China and needed an alternative.
"When they looked, it became obvious that India, which was growing at an impressive rate, was the alternative destination that they wanted. The geographical distance was a problem as it led to a gap in understanding, but that has been bridged," he added.
According to him, Japanese companies in retail and FMCG sectors have been enquiring about investment possibilities in India.
In the current liquidity crunch, the Japanese
companies are able to commit large investments in countries like India.
"After the difficult times in the Japanese economy during the late 80s and the early 90s, firms and banking institutions were very wary of facing the same situation again. Hence they conserved their energy.
"So today, as the global financial crisis has lead to companies going bust, Japan Inc has the energy with them to invest,"says Ota.
The realisation among Japanese companies that they needed an alternative destination came in middle of this decade.
As industry secretary, Dua remembers hosting at least 12 Japanese delegations in 2006-07 who wanted to understand the investment possibilities in India.
"It was around that time that they realised that India is an attractive destination but had infrastructure bottlenecks. Hence they came up with the idea of the Delhi-Mumbai industrial corridor, which they are helping us build," Dua says.
The corridor will be set up across the length of the 1500-km dedicated freight corridor between Dadri and JNPT port, covering an area of 150 km each on both sides of the DFC. Investments of at least $90-100 billion is expected in developing ports, airports, railway lines, industrial parks and educational institutes as supporting infrastructure for the industrial units that would come up.
"Japanese companies will be interested in ship-building, aircraft and defence equipment, and power equipment in the corridor," Dua says. This would give a further boost to investments from the island nation, which Ota expects to be close to $2 billion annually in the coming years.
