India on Wednesday said its strong economic fundamentals have made it a major global hub for diverse business interests and Japanese companies like Kansai Paints and Daihatsu have prepared heavy investment plans for the country.
"Progressively strengthening economic fundamentals along with improved ratings as a business destination has resulted in India becoming a global hub for diverse business interests," Finance Minister P Chidambaram told reporters at the Japanese Press Club in Tokyo.
"I am glad to say Japanese investors are not an exception to this trend... We also understand that leading Japanese companies like Kansai Paints and Daihatsu are planning to invest heavily in the coming years as are Mitsubishi Chemicals, Toyota and Honda," he said.
Right now, Japanese investment in India is prominent in key sectors like automobile and electronics, Chidambaram said and cited the names of Mitsubishi, Suzuki, Toyota, Sony and National.
Chidambaram also dispelled the popular notion that only the services sector was doing well in India.
"This is not correct as the manufacturing sector growth rate is over 9 per cent and that of the capital goods sector is at 15.9 per cent in the current year."
Asserting that India has today made trade virtually free, progressively removed various capital controls and moved towards market-determined exchange rate mechanism with investor friendly policies, Chidambaram invited Japanese investment in infrastructure, which has the potential to absorb up to $150 billion in the next 5-7 years.
"We have introduced innovative mechanisms for enabling effective use of private-public partnerships in various components of infrastructure...We look forward to Japanese collaborations in this regard," Chidambaram said.
Citing Delhi Metro as the shining example of Indo-Japanese collaboration, he said, "We would like the same to continue."
Very recently, Japanese government has indicated that JICA will take up a detailed study to establish high axle load railway freight corridors in India, expected to cost around yen 500 billion.
Dwelling on India's growth, the finance minister said India has distinguished itself as one of the fastest growing world economies.
"Since 2003-04, India has embarked on a steep, high-growth trajectory. Following a remarkable 8.5 per cent growth in GDP in 2003-04, the Indian economy achieved almost 7 per cent growth in 2004-05, and is likely to do better in the current fiscal," he said.
Apart from China, no other major economy in the world has achieved such impressive rates of growth in recent years, he said.
In the coming years, the unfolding of India's growth story will be determined decisively by a unique demographic advantage, which the country enjoys.
In the medium term, the country is expected to possess one of the largest working age populations in the world," Chidambaram said.
