India most attractive manufacturing base for Japanese companies

India most attractive manufacturing base for Japanese companies - survey

	Published : Fri, 30 Nov 2007 12:42 By : Agencies Print this Story

TOKYO (Thomson Financial) - India has surpassed China for the first time as the most attractive long-term manufacturing base for Japanese companies, which are particularly keen on the auto sector, a survey said Friday.

Asia's largest economy has warming political and commercial ties with India, although its operations in South Asia are only a fraction of its investment in China, Japan's largest commercial partner.

But a survey by the Japan Bank for International Cooperation said 70 percent of companies believed India would be a desirable manufacturing base in 10 years, up from 67 percent in the annual survey last year.

'In particular, firms in the auto sector appear positive,' the survey said. 'Great attention has been paid to India, which has taken over from China as the most desirable destination for long-term investment for the first time.'

The government-backed bank carried out the survey of 970 Japanese manufacturing firms.

China came a notch down, with 67 percent saying it would be a good place for investment in 10 years. The communist giant held the top spot last year at 74 percent.

Russia ranked third this year at 37 percent followed by 28 percent for Vietnam and 21 percent for Brazil.

However, when asked which countries were desirable in the short term, China remained at the top with 68 percent followed by India at 50 percent.

Japanese automakers have recently launched a series of new investments in India, mostly around the southern city of Chennai, earlier known as Madras.

But Japan's investment in China was nearly 40 times as much as that in India in 2005, according to Tokyo's official figures.

Many Japanese businesses have spoken of feeling more comfortable in China with its communist government and cultural linkages to Japan.

Japanese leaders have tried to move closer to India in recent years amid frequent diplomatic spats with China.

Last week the Japanese and Indian premiers agreed in a meeting in Singapore to try to conclude a free trade pact by mid-2008.

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India most attractive manufacturing base for Japanese companies - survey