The Japanese SMEs showcased their products and technology at a seminar on ‘Auto Component Industry in South India- Exploring Sourcing Opportunities from Japan’, organized jointly by the Confederation of Indian Industry (CII), Japan External Trade Organization (JETRO) and the Auto Component Manufacturers’ Association of India (ACMA) in the city on Tuesday.

The JETRO which had opened its office in Chennai in May 2010 has been receiving several hundreds of enquiries and over 200 Japanese business visitors from diverse sectors, including automobile, engineering and machinery, electronics, logistics, infrastructure, trading, IT and IT-enabled services, said Shinya Fujii, director general of JETRO Chennai.

He added that Tamil Nadu is known as 'the Detroit of India' and there are 131 Japanese auto component companies operating in and around Chennai. Fujii suggested the creation of `factories-on-rent’ in India as in China and Taiwan to facilitate easy investment and production by the SMEs.

Kensuke Ichihara, head of the delegation and director general, Manufacturing and Environment Industry Department, JETRO, Tokyo, said that more and more Japanese companies, in addition to over 280 already operating, are keen to invest in the state and India in general for manufacturing for local sales and exports, even though they are concerned about the infrastructural constraints like roads and power supply.

The Japanese auto industry is facing saturation in the domestic market and in China, which has been a focus country for long. They have to diversify and they have identified India as the best bet, Ichihara said. These companies have to find new markets as the automobile and auto component sectors have been the major contributors to Japanese GDP and employment, he added.

P S Rajamani, co-chairman, International Networking Forum, CII Southern Region and wholetime director, Simpson & Co Ltd, said that the global auto component industry is estimated to be worth $1.2 trillion in value and is likely to increase to $1.7 trillion by 2015.

“Sourcing from low cost countries is likely to increase from $65 billion in 2002 to $375 billion by 2015. In this global scenario, Indian automotive industry has the potential to emerge as one of the largest in the world,” he said.

India’s share in the global auto components market would increase from the present 0.9 per cent to 2.5 per cent by 2015. From a low-key supplier, providing components to the domestic market alone, the auto components industry in Chennai has emerged as one of the key auto component centers in Asia and is a significant player in the global automotive supply chain.

“Chennai is now a supplier of a range of high value and critical automobile components to global automakers like General Motors, Chrysler, Toyota, Ford and Volkswagen and others.” he said.

Rajamani said the automobile industry is delicensed and foreign equity investment up to 100 per cent for the manufacture of automobiles are allowed. Considering the market potential, the Investment Commission has set a target of attracting foreign investment worth $5 billion for the next seven years.