'India can be manufacturing base for Japanese SMEs'

India could be a potential manufacturing base for Japanese SMEs considering the ongoing changes in social and demographic structures in the country and the fierce competition in the global market, according to Yoshiaki Kodaki, consul general of Japan in Chennai.

Addressing the inaugural session of a FICCI summit on 'Going global to become SMEs of the future', he said his country was facing an ageing society, making it difficult for many organisations to find successors.

"A severe competition from overseas is also making it difficult for some manufacturers to sustain their businesses even though their companies are far superior in making quality products," he added.

One of the solutions for Japanese SMEs is to shift at least a part of their manufacturing bases to India due to availability of abundant qualified people and attarctive schemes offered by state governments to woo foreign direct investments.

SME manufacturers in Japan account for 88 per cent of the total employee base and 56 per cent of the total output of the manufacturing sector.

The country is facing a paradox with most of the SMEs doing well on one hand and closures rising on the other. Add to this is declining number of start-ups, resulting in a substantial decrease in the number of SME manufacturers.

The number of self-employed people, in particular, has declined in recent years and about 30 per cent of them are old, and on the verge of closing down their businesses, he added.

However, he pointed out that Japanese companies were still in the stage of discovering India as the right place for their manufacturing operations.

He hoped that more Japanese firms would explore investment opportunities in India in the future on the back of collaborative initiatives between the two governments.