Firms eye Hyderabad, India’s newest star

by Keiichi Hirose

Kyodo News

HYDERABAD, India — Ultramodern skyscrapers of metal and glass are emerging from everywhere, and the apparently endless construction of new roads and overpasses never manages to match the ever-growing transportation demands of Hyderabad, rapidly becoming southern India’s latest star.

India’s sixth-most populous city is attracting huge investments from home and abroad in industries such as information technology and pharmaceuticals, and is positioning itself to catch up with telecom magnet Bangalore and automobile center Chennai.

The slated visit to Tokyo by Indian Prime Minister Manmohan Singh in late October to ink a bilateral free-trade pact with Prime Minister Naoto Kan is expected to speed Japan’s investments in Hyderabad and elsewhere in India, especially in infrastructure developments and autos.

India’s rapid economic growth, expected to be around 8 percent in fiscal 2010, is a big attraction and China’s recent tough diplomatic stance against Tokyo over a run-in in the Senkaku Islands is making more Japanese companies eye the Indian market, industry sources said.

In Hyderabad, U.S. giants Microsoft, Google and Motorola already have a big market presence.

India’s own global IT player, Infosys, also has a huge campus in the city, as it meets the ever-increasing demand for outsourcing business across the globe.

Medical companies are also starting to pay attention as India can provide low-cost research and product development for foreign firms. Doctor Reddy’s Laboratories, based in Hyderabad, is one of India’s rapidly growing pharmaceutical companies.

While Japan’s IT presence in Hyderabad is all but invisible, Toshiba Plant, a major manufacturer of power generators, is among the few Japanese companies that have representative offices.

Toshiba Plant, along with local counterparts, supplies hydroelectric and coal-powered plants amid the Indian government’s drive to meet an ever-expanding demand for energy.

In addition, the official signing of a Japan-India nuclear accord would pave the way for Japanese firms to formally export reactors to power-thirsty India, sources say. Nuclear-armed India has already signed atomic pacts with the United States and the European Union.

Japanese carmakers are also expanding their presence in India.

Suzuki Motor Corp. has a decades-old franchise with Indian counterpart Maruti and has maintained the top position in the local car market.

Nissan Motor Co. is eyeing India as another export base after Thailand, while Toyota Motor Corp. is building up its production capacity.

In another approach to the Indian market, some Japanese firms are focusing on the expanding purchasing power of the middle class.

For example, major yogurt drink maker Yakult has been active in selling specialized drinks in a joint venture with French food and drink company Danone.

Kiyoshi Oike, managing director of Yakult Danone India, said recent research by an Indian medical group indicated Yakult drinks strengthen children’s digestive functions.

“The findings were encouraging and we hope this will boost sales here,” he said.

Yakult even deploys an Indian version of the Yakult Ladies, saleswomen who visit homes by motorbike to sell products directly to customers.