Yasukuni Enoki, Japanese ambassador to India

The market weight of onesixth of the world’s population led by some of the brightest minds in business and science is a force to be reckoned with and represents a massive opportunity for those who know how to seize it.

After decades of dealing with government interference and huge amounts of red tape, the private sector is finally coming online. The revolutionary economic reforms articulated in the 1990s by then-Finance Minister and current Prime Minister Manmohan Singh have come into fruition, bringing the power of this billion-strong country to the world’s doorsteps and enriching a country so long lagging behind in development.

Though still facing many large infrastructural challenges, the country is on the cusp of great change, a fact not overlooked by Yasukuni Enoki, the Japanese ambassador to India.

‘‘I have a double image of Japan in the 1960s on the eve of its high economic growth period, and India now. In light of India’s recent shining economic performance, Japan looks on with renewed interest,’’ he says.

Indeed, it is a year of strengthening ties between the two countries. As a postscript to the December meeting between Prime Minister Singh and Prime Minister Shinzo Abe, and a recently signed Comprehensive Economic Partnership Agreement, this year has been officially recognized as a year of Indo-Japanese Friendship,Exchange and Tourism Promotion.

The potential for these two Asian economic powerhouses is vast. It is a matter of making the right move and with the right partners.

Areas of interest

Currently, New Delhi, Mumbai (Bombay) and Bengaluru (Bangalore) are the major — but not only — centers of investor interest in the country. The automotive sector is concentrated in New Delhi — particularly within the satellite industrial areas of Noida and Gurgaon.

While Mumbai is the financial and entertainment heart of the country, Bengaluru, Chennai, Hyderabad and Pune are upand- coming areas of opportunity.

Potential exists in a wide swath of sectors from textiles to agriculture (Indian mangoes have been a great success in Japan) to IT, automobiles and infrastructure.

Naoyoshi Naguchi, director general of JETRO New Delhi

One area where Japanese expertise is still needed is infrastructure. Many Japanese companies previously had little interest in high-risk, high-return infrastructural projects such as SEZ (special economic zone) or industrial estate development,but the mood has changed.

The success of Japanese ODA (official development assistance) infrastructural projects such as the famed New Delhi Metro demonstrate the feasibility and urgent need for this kind of participation.

It started with the car

The 1980s saw the introduction of Japanese manufacturing processes to Indian factories, starting, naturally, with the automotive sector. At that time, major partnerships like Maruti Suzuki developed and thrived, giving birth to the ubiquitous Maruti badge adorning subcompact affordable cars on all of the subcontinent’s roads.

This influence and guidance from Japan helped Indian manufacturing techniques become internationally competitive. To ensure Japanese companies’ high-quality standards were met, companies like Suzuki and Honda trained their Indian partners all the way down the supply chain with best practices and production techniques.

Like in many other parts of the world, ‘‘kaizen,’’ ‘‘kanban’’ and ‘‘muda’’ became part of the industry vocabulary.

‘‘It can be said,’’ says Vishnu Mathur, executive director of ACMA (Automotive Component Manufacturers Association), ‘‘that all Indian automotive manufacturing is Japanese at heart. We learned quite a bit from our Japanese friends.’’

Today, Indo-Japanese automotive collaboration is stronger than ever. Honda has engaged the market since 1984, dominating the largest two-wheeler market in the world with Hero-Honda, an Indo-Japanese jointventure so successful that it is studied in business school case studies.

Hero Honda is now the world’s single largest motorcycle company, literally a textbook example of the potential that lay within Indo-Japanese collaboration.

Honda’s entry into the car market has been extremely successful as well. Masahiro Takedagawa, Honda Siel Cars India's managing director, is confident enough in the future of Honda cars in India to have leased their new factory space in Gurgaon for 99 years.

Another successful joint venture is seen in the ongoing relationship between the globallyminded industrial family of the Kirloskars and Toyota. Both are enduring players in the person-to-person relations that are so important to the health of international business, and they have spearheaded projects aimed at bridging cultural gaps between the two business communities such as The India Japan Initiative that is led by Geetanjali Kirloskar.

One of India’s greatest resources is its motivated and highly educated population. At Bengaluru-based Edkal, all employees learn Japanese, an added skill that makes them more globally competitive.

The new direction of technology transfer

While Japanese technology helped bolster the economy in the 1980s, today's trend is actually the reverse. The Japanization of Indian manufacturing has been met with the Indianization of those same processes Ð the incorporation of information technology to improve the overall efficiency of operations from the factory floor to the sales floor.

Indian IT know-how is making its way to Japan and it is not just savvy international businessmen who are beginning to recognize the potential. Yokohama's forward-thinking Mayor Hiroshi Nakada recognizes the value of Indian IT and has conducted several visits to the southern city of Bengaluru in the hopes of attracting its talent to his city. Known to many as the Asian Silicon Valley, it is this city, above all others, that illustrates the potential of this burgeoning economy.

Bengaluru: A model for modern India

The story of India's IT boom is centered in one city: Bengaluru (changed in September 2006 from the English ``Bangalore'').The city is the emblem of the country's technical skill and a clustering of some of its most powerful technical brain trusts and offshoring facilities.

The city has long been home to many of the country's best engineers and scientists. Due partly to its temperate climate and relatively low dust levels, the city developed a strong manufacturing and industrial base, playing home to a cluster of public manufacturing heavy industries such as Bharat Heavy Electricals Ltd., Hindustan Aeronautics Ltd. (HAL) and the headquarters of the Indian Space Research Organization.

The critical mass of capable engineers, scientists and research professors created by these organizations eventually created the base of talented technologists that attracted worldwide attention handling much of the preventative work that diverted the infamous Y2K computer crisis.

From this opportunity came more work, creating some of the world's largest offshoring success stories. Two of India's largest IT outsourcing companies, Infosys and Wipro, are located here, along with a host of other up-and-coming companies such as MindTree, iGate and Edkal.

Heavyweight IT multinationals such as Oracle, Intel and IBM have also set up major operations here, speaking volumes to the quality of the human resources available.

Bengaluru is now India's fourth-largest and fastest growing market, with the highest per capita income of any other city. This is widely attributed to the tremendous reputations of its IT companies. Of the entire world's SEI-CMM Level 5 Companies, 38 percent are headquartered in the city, giving it a prominent place in the global IT map.

Biotechnology is also blooming in this ``Garden City.'' It is home to about 50 percent of all BT companies in India such as BioCon, Strand Life Sciences and Sami Labs. By all accounts, Bengaluru is a city on the rise.

What is vitally important to note about this phenomenon is that it is not just outsourcing and offshoring that India is known for. India is not just a source of low-cost IT labor. It is a nexus of innovation and cutting-edge design.

Lesser known startups like Encore, MobiApps, Esqube and others are quietly developing products that are changing the world while larger firms such as Aztec Software and Quest Engineering are providing worldclass end-to-end solutions to world-class clients such as Microsoft and Toshiba.