Suzuki launches a $40 million fund in India to aid rural startups

Suzuki Motor Corp. launched a $40 million fund in India to invest in small rural businesses as the Japanese automaker aims to improve its presence in one of the world’s fastest-growing markets.

Through the fund, called Next Bharat Venture, Suzuki will invest in startups related to agriculture and microfinance, the company said Thursday, adding that it will also provide training to rural entrepreneurs.

While Suzuki, via Maruti Suzuki India Ltd., is the nation’s biggest automaker with a 41.6 per cent market share, it risks losing customers due to its paltry line up of hybrid cars and lack of any electrified options. The company already has access to around 400 million people in India via its thousands of show rooms and service centers but Suzuki hopes the fund will help it reach an even wider audience, Executive Vice President Naomi Ishii said.

“Our concern was how to access the remaining one billion and contribute to them," Ishii told Bloomberg News at the company’s headquarters in Hamamatsu.

The move also comes as Suzuki is venturing into new areas such as biogas in India, with a plant starting operations in June. Suzuki hopes that the fund targeting small, village-based entrepreneurs will help create business opportunities among underserved areas, thus bolstering its appeal beyond its existing clientele.

“It’s an investment for the long run," he said. Ishii, previously based in India managing Toyota Motor Corp.’s local unit, said that establishing a network of entrepreneurs in India “will be an enormous asset" for the company.

Suzuki prepares for the future

The new fund will operate out of three offices based in Gujarat, Bangalore and Hyderabad and be led by Vipul Nath Jindal, a graduate of the Indian Institute of Technology in Hyderabad.

The school, which has produced many engineers for Suzuki, is also the site of the Suzuki Innovation Center, which promotes interactions between the Japanese and Indian business communities. The center will now be run as part of the fund, the company said Thursday.

Suzuki has been running technology and non-technology related initiatives through the center to improve its understanding of remote areas in parts of the country and find new sectors to delve into, Ishii said.

New businesses may “come out of the latest venture initiative" for Suzuki, he said.

It isn’t alone in courting India’s growing consumer market, especially given a slowdown in the China market. Toyota’s local subsidiary earlier this week announced a tie-up with the Indian Institute of Science in Bangalore to establish an engineering laboratory.

Suzuki, which mainly makes small, compact internal combustion engine cars, has been in the automobile business in India since 1982 but is facing renewed competition from both local and foreign automakers with better hybrid and electric offerings.

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