What are the medium to long term implications of global policy tightening?
Global policy is being tightened to control inflation. Thus, the global GDP is going to be affected in a big way. This will manifest in the form of a fall in discretionary demand, lower capital expenditure by corporates and a marginal increase in the unemployment rate among others. Concerned governments may follow a loose fiscal policy to balance the effects of the tight Monetary policy,
How is India placed among Asian peers?
India is one of the fastest growing economies of the world. With digital innovation, rising consumer demand, continued government and regulatory support among other factors, India is well-positioned to grow not only in Asia but across the globe.
How are you planning to expand corporate credit in India?
As one of the largest economies of the world, India has a tremendous influence on the world stage. It is a major market for MUFGs. We are already supporting corporates for their domestic and offshore lending. To further strengthen our commitment to India, we have infused Rs 3,000 crore of capital into our Indian franchises.
What are your other plans for investment in India?
We are growing in India and with the increase in capital, we will be in a stronger position to better support our customers and their aspirations. In 2020, we established MUFG Enterprise Solutions India (MES India) as our global capability hub, which acts as the Made in India technology and innovation arm for MUFG operations across the globe.
What are your plans for the Indian start-up industry?
For investment in startups, MUFG has three investment arms for India. In March this year, the MUFG Ganesh Kosh was established. This is a $300 million fund to invest exclusively in seeding Indian start-ups. This month, we marked our first investment.
MUFG Innovation Partners, our $400 million corporate venture capital fund, invests in early- to mid-stage startups. On the debt side, the $500 million Mars Growth Capital is providing venture debt financing to Indian growth companies.
How is GIFT City shaping up for MUFG?
We have expanded our presence by opening a branch in Gujarat International Finance Tec-City (Gift City) to become the first Japanese bank with the largest network in the country. We wish to contribute to India’s vision of being a gateway to the world, using our capabilities and relationships to facilitate greater business cooperation.
What are Japanese companies doing to capitalize on India’s manufacturing story?
Japan is becoming the largest lender through affordable loans, grants, technology sharing initiatives and schemes.
India has been the largest recipient of Japanese ODA (Official Development Assistance) for the past decade. High-speed bullet trains and the development of Japanese Industrial Townships (JITs) are some successful examples of Japanese cooperation.
How do you plan to take advantage of Japan-India bilateral trade?
Japan’s interest in India is increasing for a number of reasons, including India’s large and growing market and investment opportunities. Recently, India has emerged as the preferred choice for Japanese investors as it offers political stability, infrastructure opportunities, young population and mass consumerism.
Japan ranks fifth among the largest sources of investment in India with foreign direct investment (FDI) of $38 billion from April 2000 to June 2022.
What role can Japan play in India’s infrastructure sector?
Japanese engineering companies such as Mitsubishi Heavy Industries, Mitsui Engineering, Sojitz and Toshiba have shown interest in executing the Delhi Mumbai Industrial Corridor projects. Investments by Japanese companies are picking up pace and we are sure this is just the beginning of the growth story.
How is private sector participation?
On the private sector front, India is already a long-term home for various renowned Japanese companies such as maruti suzukinippon steel, Panasonic, Hitachi and many more. Around 20 Japanese companies have applied for various PLI (Production Linked Incentive) schemes, which have led to investments of over $500 million in India.
The Bank of Japan is an outlier with interest rates close to zero. Why?
The rise in inflation has mainly been attributed to loose fiscal and monetary policy during the COVID pandemic and a rise in commodity/energy prices following the Russia-Ukraine conflict. These are external to the Japanese economy, which continues to see very low demand-inflation.