Shrugging off the Covid-19 related lockdown and its impact on the economy and businesses, several Japanese multinational corporations are keen to expand their India presence, transforming it into a hub for the region, according to Kanwal Jeet Jawa, Managing Director and CEO of Daikin Airconditioning India.
“Many companies want to move out of China, Vietnam, Indonesia and Thailand, to not only tap the potential market out in India but also use it as a base for manufacture and make it a regional hub for other markets,” Jawa told BusinessLine.
Betting big on India
The cost structure is still lower and the logistics has improved significantly. The Indian government is also proactively seeking to attract new investments into the country, all leading to their growing interest, he said.
“This is a great opportunity as Japanese companies like Panasonic, Mitsubishi, Hitachiand Daikin, among others, are all looking at stepping up presence and working on potential for backward integration projects for compressors, motors, copper tubes, to meet their supplies as also working on new/innovative technologies,” he said.
“Not just Japanese companies, it is an opportunity for India to attract companies from the US, Korea and other countries through FDI route in the changed global business environment,” he said.
Referring to the country’s home air-conditioning market, which has been growing at 12-15 per cent, he said, “It may see a dip of 25-30 per cent this year due to the lockdown, general slowdown and also the consumer sentiment, but the long-term business prospects are extremely strong.”
Citing the example of China where more than 110 million home ACs were sold last year, he said, “in India, it is about 7 million units last year and 5.5-6 million units a year before. But this number is set to swell as affordability goes up.”
Daikin, a 100 per cent subsidiary of the Osaka-based corporation which had closed last fiscal with a revenue of over ₹5,000 crore, has a capacity to manufacture 1.5 million units per annum across two plants at Neemrana in Rajasthan. It is looking at setting up its third plant in India in South India. The new plant will help the company meet growing demand in India, and step up exports to Sri Lanka, Bangladesh, Nepal and to select countries in Africa.
Eyeing fresh capacity
“The third plant is necessary as we are functioning at 80-85 per cent capacity. We need fresh capacity and are in the process of finalising the location and investment plans,” he said.
“Alongside, we are in the process of establishing R&D centres at Hyderabad and Manesar. Already a small facility in Hyderabad is working in the areas of artificial intelligence and Internet of Things (IoT),” he said.
“The Neemarana, Rajasthan factory, which is the engine of growth for Daikin, has enabled us to consolidate presence with a second factory.”-The Hindu Business Line