Keidanren held an online meeting on August 27, and heard explanations about the economic and industrial situation from the heads of five offices of JETRO (Japan External Trade Organization) in India. The outline is as follows.

■ How to see India (Yasuyuki Murahashi, New Delhi office manager)

India will see the first wave of the spread of the new coronavirus infection in 2020, and a strong wave in April-May 2021. We experienced the second wave, but during the second wave, economic activity continued without nationwide lockdowns centering on activity restrictions on a state-by-state basis. Inward direct investment in EVs, renewable energy, e-commerce, etc. has been brisk during this period.

As the Modi administration pursues reforms that previous administrations have failed to achieve, the policy direction has become clearer. In other words, based on the "Make in India" policy, it aims to improve the quality of the manufacturing industry and expand exports, aiming to become an "independent India."

While everyone recognizes India's potential and attractiveness, there is also a severe business environment. India is a politically and economically indispensable partner for Japan, and is a treasure trove of business opportunities, including the resolution of social issues. It can be said that Japanese companies need to take measures unique to India, not as an extension of Southeast Asia, in terms of how to incorporate India in terms of human resources and innovation.

■ How to incorporate human resources and innovation in India, a digital powerhouse (Takashi Suzuki, Bengaluru office manager) It has grown into an unlisted venture company worth more than $1 billion. Even in 2021, unicorns have been born one after another, and the stock market has been listed one after another. Investments by foreign investors are increasing, and it is pointed out that the presence of Japanese companies is declining.

Startups are popping up all over India. Hyderabad is similar to Shenzhen in China, with hardware as its specialty. On the other hand, Mumbai, like Singapore, has seen the birth of startups in the financial services sector. Global companies are showing moves such as enclosing startups or developing them as R&D bases.

For Japanese companies, it is important to actively recruit Indian human resources who are not only good at IT, but also have excellent management sense.

■ Diverse opportunities to enter the Indian market (Munenori Matsunaga, Mumbai office manager)

75% of all Japanese companies operating in India are concentrated in the northern and southern parts of India. Western companies, on the other hand, are concentrated in the west, such as Maharashtra, where Mumbai is located.

In April 2020, the Modi administration announced the Production Linked Incentives (PLI) scheme as a measure to promote investment toward the realization of a "self-reliant India" policy. It provides incentives such as subsidies in 13 fields, including advanced chemicals/cell batteries, electronic/technical products, automobiles/auto parts, and pharmaceuticals, to promote domestic production in India.

At the moment, only one company in the medical device field has been approved for granting subsidies to Japanese companies. Prime Minister Modi has called for active investment by Japanese companies in the fields of cell batteries and auto parts.

In India, the development of logistics infrastructure, which had been stagnant due to the corona crisis, has resumed and is in full swing. Regarding the plan for the Western Corridor (Delhi-Mumbai section) of the dedicated freight railway, the first construction section was completed, and the world's first double-decker container vehicles began loading and transporting freight. I would like you to consider actively investing in India.

■ Situation in Tamil Nadu and the rise of new major industries (Yukihide Nakayama, Chennai office manager)

In Tamil Nadu, where Chennai is located, the number of new coronavirus infections has decreased significantly, and factory production has declined. Many of the restrictions on life and living have already been lifted. Tamil Nadu is home to many motorcycle and automobile set manufacturers. Due to the stagnation of exports of semiconductors and parts brought about by the spread of infection in Malaysia and Indonesia, set manufacturers in Chennai are also affected by production cutbacks.

In February 2021, Tamil Nadu revised its own investment policy for the first time in seven years. In particular, mobile phones and electric vehicles have been designated as priority areas, and investments in these fields are continuing this year. In particular, Foxconn Group's investment in iPhone production and OLA's investment in electric motorcycle production are large, and future trends will be closely watched.

Also, it should be noted that the state government's investment incentive scheme is easier to use than the central government. Although the government of Tamil Nadu changed the ruling party after the state assembly elections in May, the state continues to maintain a positive stance toward attracting foreign investment.

■ Trends in the Indian EV market (Takehiko Furukawa, Head of Ahmedabad Office)

In 2018, the Indian government set a goal of having EVs account for 30% of all automobile sales by 2030. EVs are expected to play a role as a driving force in the "Make in India" policy as well as reducing environmental impact. However, at present, the overall automobile market is shrinking due to the impact of the new corona, etc., and the growth of EV sales is sluggish.

The main challenges for the popularization of EVs in India are the price difference with conventional vehicles, the lack of car model options, and the underdeveloped charging infrastructure. The central government of India is promoting EV incentives and prioritizing the introduction of EVs in public transportation and commercial vehicles. In addition, a "vehicle disposal policy" was introduced, such as discounts for new vehicle purchases based on scrapped vehicle certificates and incentives for exemption from registration tax. Each state has its own incentives for EV buyers, parts manufacturers and charging infrastructure.

The advanced chemical and cell battery fields are subject to production-linked preferential measures promoted by the Indian government. EV is a broad-based industrial field that will lead to the transformation of the social system, and because there are big business opportunities in the medium- to long-term, Japanese companies are also expanding into this field through active utilization of preferential treatment. I want you to.

[International Cooperation Headquarters]