Japanese Automakers Cluster round Southern India

Japanese enterprises are speeding up to cluster round southern India. By October, the number of Japanese enterprises which have entered Tamil Nadu, the southeastern state of India exceeds 300, recording the highest figure in India. Though the Indian economy gradually slows down, it is expected that the investment regarding the demand growth in the medium to long term would last for a while. However, the delay of investment in infrastructure like harbor and road construction may become a bottleneck for the Japanese enterprises which have moved into the Indian market. The distance between Nissan’s Indian factory and the harbor are 80km. It takes 8 hours for transportation. Insufficient power supply is a common problem. Factories need to prepare power generators by themselves so they require large investment at the initial developing phase.  

The statistics of Japan External Trade Organization (JETRO) indicated that the number of the Japanese enterprises which entered Tamil Nadu increased four times more than that of 2008. In addition to the mass production base of Nissan with the annual output of 400,000, the Korean Hyundai, German Daimler, German BMW and U.S. Ford all have CBU factories in India. Toyota has its base in Bangalore, Karnataka, a location near Chennai. The suburbs around Chennai and Bangalore alone have over 10 automakers moving in with the annual output in total of more than 1.8 million units and thus known as “the Detroit of South Asia”. 

Tamil Nadu is near the harbor and suitable to serve as an import and export base. The state government puts great emphasis on the technical and vocational education. There has been high evaluation of the governmental plan that it provides a number of over 1 million engineers to the labor market per year.