After Delhi-Mumbai, Japan targets Bangalore-Chennai

It looks like Japanese companies cannot have enough of India.

Even as the Indo-Japanese mega industrial corridor between Delhi and Mumbai remains in early stages, the Japanese are pushing for a similar ‘corridor’ between India’s IT hub Bangalore and its export-manufacturing hub Chennai.

Industrial corridors are comprised of newly constructed mini and mega cities that are designed from ground up as a modern centers of commerce and manufacturing.

Several such cities are being built with the help of Japanese conglomerates such as Mitsubishi, Hitachi etc. on either side of the Delhi Mumbai rail link.

Some of the cities, which include both factories and residential areas meant to house the workers and professionals who will flock to the city, are tailored to suit certain types of manufacturing or products.

The cities are meant to help Japanese companies diversify their manufacturing base away from China with which Japan often has tense relations, and bad memories.

See India plans 7 next generation cities with Japanese help.

Delegations from the two countries, led by their respective trade ministers, are holding a “Business-Government Policy Dialogue” in Delhi

“The two Ministers confirmed the importance of cooperating in infrastructure development in the areas along the Chennai-Bengaluru Industrial Corridor including the preparation of a Comprehensive Integrated Master Plan of this region,” a joint statement released by the two groups said.

It was about six months ago that India and Japan decided to move seriously ahead on the Bangalore-Chennai project, even as the Delhi-Mumbai project is yet to see concrete, on-the-ground developments.

In the Bangalore-Chennai region, the Japanese are urging the Indian government to to improve infrastructure such as ports, industrial parks and facilities in Ennore, Chennai and the adjoining areas and ensure stable power supply.

Chennai is home to export-oriented manufacturing operations of many multi-national companies, such as Hyundai Motors and Nokia.

Unlike the National Capital Region, goods produced in Chennai don’t have to be shipped 1500 km before they can be hoisted on to ships.

Unlike Mumbai, the state government in Chennai has proven to be deft at attracting and keeping foreign companies and providing them with infrastructure such as cheap land and electricity. Labor costs too are lower in Chennai than in Mumbai.

Chennai’s biggest competition in Gujarat, where chief minister Narendra Modi has proven equally capable of impressing foreign and domestic investors.

Meanwhile, the Japanese delegation noted the progress being made in the Delhi-Mumbai industrial corridor cities, such as Dahej in Gujarat.

The Japanese side, however, noted that India needs to relax some of the regulations and curbs that it places on investment and capital if Japanese companies are to continue to invest in the project without hardships.

“… the two Ministers expressed their satisfaction at the progress made in the seawater desalination project at Dahej, Gujarat,” the joint statement noted.

As part of Japan’s efforts to develop India as a viable manufacturing base for its companies, the Japan External Trade Organization (JETRO) established a Business Support Center in Chennai.

It also provides support for Japanese companies to start businesses in special industrial parks in India.

On its part, India has relaxed some of its rules regarding industrial and manufacturing activity. Though not as ambitious as initially suggested, it also put in place a ‘National Manufacturing Policy’ to help companies set up zones in which India’s notorious red tape and bureaucracy would be kept at a minimum.