Japan said yesterday it would buy a major stake in an Indian company at the center of a huge infrastructure building project, marking Tokyo’s latest investment in the South Asian giant.
The government-linked Japan Bank for International Cooperation would purchase a 26 percent stake in the Delhi-Mumbai Industrial Corridor Development Corp (DMIC), Japanese industry minister Yukio Edano said.
The Indian firm has been charged with building massive projects linking Delhi and Mumbai including a freight railway between the two Indian cities.
Other projects include industrial parks and power stations that are expected to be built around the rail line.
In December, Japanese Prime Minister Yoshihiko Noda promised roughly US$4.5 billion in financial support for the state-funded Indian firm’s projects.
The stake in DMIC will cost the Japanese bank 260 million rupees (US$4.7 million) with one of its executives to sit on the company’s board.
The investment comes as Japan looks to boost its footprint in Asia’s biggest democracy amid simmering diplomatic tensions with neighboring China and South Korea.
However, deadly labor unrest at a plant operated by Maruti Suzuki, India’s largest carmaker, which is owned by Japanese automaker Suzuki Motor.
A riot by workers last month at the Maruti vehicle factory led to the death of a manager and injury to 96 supervisors.
Separately, India on Monday invited China to invest in its new flagship manufacturing zones as part of a push to broaden commercial links and cut a ballooning trade deficit with its Asian neighbour.
India’s trade deficit with China, a longstanding economic irritant between the emerging market giants, soared 42 percent to nearly US$40 billion in the last fiscal year, while total bilateral trade climbed 27 percent to US$75 billion.
“We’ve invited China to participate in and support the establishment of one or more of the National Investment and Manufacturing Zones,” Indian trade minister Anand Sharma said in New Delhi after talks with his Chinese counterpart Chen Deming (陳德銘).
“That is where the opportunities beckon,” Sharma said in a speech to Indian and Chinese business leaders, adding the response from the Chinese to the investment proposal had been “positive and encouraging.”
The zones are being set up under India’s National Manufacturing Policy which aims to boost manufacturing as a percentage of gross domestic product to 25 percent from 16 percent in the next decade.
The policy is part of India’s struggle to provide jobs to its growing army of young people.
Chen, in turn, said Beijing, which exports mainly capital goods such as heavy engineering equipment to India, recognized its trade relationship with India was lopsided.
“We want to buy more goods from India to grow our trade relationship in a more balanced manner,” he said.
“China and India are both fortunate to have sizeable domestic markets which give us the the opportunity to offset the risks of the weak global economy,” he added.