India may bring Japan on board for manufacturing plan

NEW DELHI: The Indian government is counting on aggressive investments from Japan to fund the proposed National Manufacturing Zones (NIMZs) in the country.

Under the new manufacturing policy, the government proposed to set up NMIZs across the country to ramp up manufacturing output from 16% of GDP at present to 25% of GDP by 2025 and generate at least 100 million additional jobs.

"Given the scale of investment required in these zones, we are seriously contemplating getting Japan on board," said an official in the Department of Industrial Policy and Promotion.

The government is likely to put forward the idea before Japanese prime minister Yoshihiko Noda who is on a visit to India

"The projects will be bid competitively and we are hoping to see the same level of enthusiasm from the Japanese investors as we saw in case of the industrial corridor," he added on the condition of anonymity.

Japan is already a major development partner in the proposed Delhi Mumbai industrial corridor, contributing $9-billion into the project. It has 26% stake in the special purpose vehicle created to implement the corridor.

Japan is India's largest bilateral donor and its cumulative investments in the country amounted to 3,700 billion yen by June 2011.

At an industry event on Wednesday Prime minister Noda said that Japan is eager to strengthen economic relations with India, signaling the possibility of increased investments.

"I am convinced that we need to strengthen the partnership. India and Japan are stepping up their cooperation in areas like political, security and economic fields and also regional areas," he said.

Meanwhile, India and Japan on Wednesday agreed to a dollar swap agreement of $15 billion, a move which will help stabilise the rupee and boost trade between the two countries, a joint statement said. An earlier $3 billion arrangement, that came into force in 2008, had expired in June. The dollar swap arrangement would help India in supporting the rupee, which has depreciated by about 15-16% against the US currency since April.