Date:10/02/2006 URL: http://www.thehindubusinessline.com/2006/02/10/stories/2006021002810300.htm

Back `Labour issue delaying decision on Toyota's small car plant' — Japanese trade team visits Bangalore

Our Bureau

Mr Osamu Watanabe, President, Japan External Trade Organisation (Jetro), addressing a press conference in Bangalore on Thursday. - G.R.N. Somashekar

Bangalore , Feb. 9

THE Toyota/Daihatsu small car plant proposal for India is alive but the recent labour-related trouble at Toyota Kirloskar Motor Ltd's Bidadi plant near here has delayed a decision, Japanese officials on trade mission said on Thursday.

Automotive, ancillary and auto components sectors figure high for probable Japanese investments in the country, according to Mr Osamu Watanabe, President of the Japan External Trade Organisation (Jetro) under the Japanese Ministry of Economy, Trade and Industry, and Mr Kazumasa Kuboki, Senior Investment Advisor at Jetro's Bangalore office.

Daihatsu, Toyota's compact car arm, has been reported to be keen on investing around $90 million in an Indian plant, with first rollout planned earlier for 2007. Toyota's Bidadi estate is tipped to be a most likely location for the plant.

However, a rigid labour policy was stalling its decision, they told Business Line.

Mr Watanabe is leading a 73-member business delegation, of mainly SMEs, to Delhi, Bangalore, Chennai and Kolkata.

He earlier told a news conference that Jetro was receiving a growing number of inquiries from Japanese firms on India. These were in information technology, manufacturing, electronics and electronic components, consumer appliances and construction-related machinery activities. The firms were interested in investments and setting up joint ventures. IT companies were an attractive area for Japan's huge outsourcing needs and for forming collaborations.

Bureaucracy hindering: However, a rigid labour policy and time-taking bureaucratic procedures were hindering big Japanese investments, which were barely 0.2 per cent of Japan's overall FDI, compared to 9 per cent in China. The manufacturing sector also needed a supporting ancillary and components units for setting base.

The positive factors were the 8 per cent growth rate, pro-SME, and a pro-manufacturing slant.

"We see a bright future," Mr Watanabe said.

"Our population started declining last year and the society is ageing rapidly. We need a young work force for the manufacturing sectors and also in the service sector for caring for the aged," Mr Watanabe said.

The team was also interested in the technical pool coming out of centres such as Nettur Technical Training Foundation, which it visited besides Infosys Technologies, ITPL, Biocon Ltd, L&T Komatsu, MICO and Makino.