Japanese investment has already made inroads in India. In 2015, Japan was the fifth biggest foreign investor in India. The gung-ho Chinese investment in India makes it the future driver of foreign investment. In 2015, China reached half the way of Japanese investment in India as compared to six times lower in 2014. Chinese investment binge waked up Indian Government to perceive the Chinese muscle of investment and prodded to balance between investment flow and the security concern, since FDI turns instrumental to Make in India. India has mulled for relaxation of visa rules and considered for withdrawing China from the list of PRC (Prior Referral Category).

With Modi-Xi Jinping relations cordial, Chinese investors plunged in India with mega investment proposals. During 2016, Chinese companies proposed US $ 2.3 billion worth of investment in the country. The proposals were acquisition of 86 percent stake, worth US $ 1.4 billion , by Shanghai Fosun Pharmaceutical Co of Hyderabad based Grand Pharma Ltd, Beiiing Miteno Communication Technology ‘s investment of US $900 million in Media.net, Jiangsu Longzhe’s investment of US $125 million in Diamond Power Infrastructure and Tidfore Equipment investment of US $150 million in Uttam Galva Metal Works.

In mobile manufacturing, China has already made a strong footprint In India. More than half a dozen mobile manufacturing companies are from China. Just before Chinese telecom giant Huawai’s announcement of shifting plant to India, Xiami had revealed plan to set up two manufacturing plants in the country. The upstart brands like Gionee, Oppo, Vivo, Meizu, One Plus and Coolpad have also announced their facilities in India.

Given the Chinese investment binge and China being a leading member of BRICS, China is proposing further foreign investment in India. The upswing in the Chinese rank in the investment may pose challenge to the Japanese investors.

India’s potency snowballed after China lost its vigor as low cost workshop of the world. According to FDI Intelligence, an outfit of Financial Times, UK, India replaced China as leading recipient of FDI in Greenfield projects in 2015. FDI in India increased by 37 percent in 2015 and surged further by 18 percent in 2016, bringing cumulative growth by over 50 percent. This revealed India’s strength in attracting FDI amidst global currency turmoil and weakening of trade blocks, with Brexit in the offing.

In 2015, Chinese direct investment in India soared to US $ 869 million, a six time growth compared to 2014 and double the accumulated investment in the past 15 years. According to Vice-Director of International Studies of Zhongnam University of Economics and Law, Mr Luo Xuan, number of Chinese companies have planned to invest in India. It became a trend for Chinese investors to travel India in groups to explore investment possibilities, according to the Vice Director.

Responding to Chinese reinvention of India as an important investment destination, Indian think tank NITI Aayog renewed interests to attract Chinese investment, despite the security concers. Underpinning the concern over large trade deficit, close to US $ 53 billion which alone accounts for almost half of India’s global trade deficit, Indian honchos asserted that India cannot forever remain Chinese market without broader economic ties. Both NITI Aayog and National Reform Commission of China entered several agreements of economic cooperation in November 2016, embracing energy, urban development, Digital India, Internet Plus as well as greater access to Indian IT firms in China.

On Japanese side, there was a turnaround in the Japanese zeal to invest in India. Nullifying the previous sullied image, Japanese investors underwent for a new look towards India. The green shoots are visible. The Japanese investment soared five times in 2016 - from US $ 1.7 billion in 2015 to US$ 5.8 billion in 2016.

Seventy percent of Japanese investors, who opened their shops in India, are expected to expand their operations in next few years, according to a survey by JETRO (JETRO Survey on Business of Japanese Companies in Asia and Oceana). The ratio of Japanese business expansion plan in India is the highest among the Japanese investors in Asia and Oceania. The sustainable growth in the Indian economy, continuous flow of deregulations and increase in sales attributed to the turnaround in the Japanese yearn to invest in India.

A cross analysis of Japanese and Chinese investment in India reveals that both are on the same planks in terms of areas of investment and the factors attributing to their overseas investment. During 2000 to 2015, the biggest investment by Japanese was in drugs and pharmaceuticals, followed by automobile. Nearly 23 percent of Japanese investment flowed into drugs and pharmaceuticals and 18 percent in automobile. However, while the investment in drugs and pharmaceutical was mainly due to a mega investment by one company, Daiichi Sankyo Co, Japan, investment in automobile was widespread.

If Shanghai Fosun Pharmaceutical Co‘s mega acquisition of Hyderabad based Grand Pharma Ltd fructifies, it may pose a big challenge to the Japanese investment in Indian drugs and pharmaceuticals. Similarly, the big investment by SAIC General Motors Investment Ltd of China in 2015 will bring challenges to the Japanese automobile industry and TBEA Shenyang Transformer Group ‘s entry in India will bring more Chinese electric equipment manufacturing companies in India, throwing challenges to Japanese electrical equipment manufacturers in India.

Currently, China Railway Corporation (CRC) is carrying out feasibility studies of high speed trains between Chennai - New Delhi route. It will be no wonder if China grabs the construction deal of the longest route of high speed train and can pose a major challenge to Japan hegemony in high speed train. China has already proven its capability after winning Jakarta – Bandung 150 km high speed rail project, against stiff competition from Japan. Both China and Japan carried out comprehensive studies of the project. That way, it is now a big battle in Indian soil between Chinese and Japanese investors.(IPA Service)