JBIC Supports Japanese Firm's Auto Parts Business Expansion in India By Directly Providing Loan to a Local Japanese Affiliate
International Business Development
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Catalyzing International Finance
NR/2008-47
September 25, 2008
September 25, 2008
- Japan Bank for International Cooperation (JBIC; Governor: Koji Tanami) signed today a loan agreement totaling up to US$20 million with Motherson Sumi Systems Limited (MSSL), an Indian corporation where Sumitomo Wiring Systems, Ltd. (Head Office: Yokkaichi City, Mie Prefecture) has equity stakes.
- The proceeds of the loan will be used for financing the new construction and expansion of production facilities for automobile wiring harnesses etc. in Noida in Uttar Pradesh, Bangalore in Karnataka, and Chennai and Pondicherry in Tamil Nadu, by MSSL, a joint venture that Sumitomo Wiring Systems has set up jointly with Sojitz Corporation and Motherson Group of India.
- The automobile sales market in India, a country which is drawing attention as a BRICs nation, has grown 2.3 times over the past five years, driven mainly by the expansion of its middle-class population. The sales volume of automobiles jumped to the 2-million range in 2007, and a further increase is forecasted for the coming years. The world's leading automobile makers are thus stepping up their investment activities in India in earnest, and Japanese auto parts makers are also intensifying efforts to newly construct/expand production bases in the country. Given these developments, JBIC has decided to provide the loan in support of Sumitomo Wiring System's overseas business development.
- In the Survey Report on Japanese Manufacturer's Overseas Business Operations released by JBIC in FY2007, India passed China for the first time to become the most promising destination for sales and investment in the coming 10 years, indicating the ever-growing attention that Japanese firms are paying to the country. On the other hand, inadequate infrastructure development, the lack of transparency in legal procedures and the like have been cited as issues on India's agenda. JBIC to date has supported India for the infrastructure development by utilizing its various financial instruments. The latest loan is to be directly extended to MSSL, a locally operating company in India, with the aim of supporting the company's overseas business development by mitigating India's possible country risk.
