TOKYO – Toyota, Honda and Suzuki are spending billions of dollars to build new cars and factories in India, a sign of the country’s growing importance as a manufacturing hub as Japanese automakers redraw global supply chains to reduce dependence on China.

Toyota, the world’s largest carmaker, and Suzuki, the leader in the Indian market with almost a 40 per cent share, have separately announced investments totalling US$11 billion (S$14.4 billion) to beef up manufacturing and export capabilities in the world’s third-largest auto market.

Honda said last week it will make India a production and export base for one of its planned electric cars.

India’s low costs and vast labour pool have long been an attraction for manufacturers.

Now, Japanese automakers are stepping up operations as they pivot away from China, both as a market and a manufacturing base, multiple industry executives said. Another benefit: India remains all but closed to Chinese electric vehicles (EVs), so Japan’s carmakers – at least for now – will not face bruising competition from BYD and others there.

A brutal

price war among Chinese EV makers

has made it difficult to turn a profit in China. Adding to the pain, Chinese carmakers are now expanding overseas and snatching market share from Japanese rivals in South-east Asia.

“India is a good choice as a replacement market for China,” said Ms Julie Boote, an autos analyst at Pelham Smithers Associates in London, citing low profit margins in China.

“For the time being, the Japanese think it’s a much better market because they don’t have to deal with the Chinese competitors,” she added.

Other draws include the improved quality of India’s manufactured goods, and incentives from Prime ...