A top Japanese conglomerate is relocating part of its selected foam operations to Sri Lanka from China and began operations this week, a statement from the Industry and Commerce Ministry said in Colombo Friday.

The company is also considering plans to set up world class automotive component production in Sri Lanka, with latest Japanese technology.

"Japanese giant INOAC's new venture with a 20-million-US- dollar investment is one of the biggest industry foreign direct investments to come from Japan to Sri Lanka in our bilateral partnership history," Minister of Industry and Commerce Rishad Bathiudeen said in a statement.

INOAC Polymer Lanka is the only manufacturer of polyurethane in Sri Lanka.

Polyurethane is a specialized type of plastic material widely used in the car industry and comfort products.

INOAC, a global supplier to the automotive industry, is a privately-held Japanese conglomerate established in 1926, operating in 20 countries including the United States, Canada, South Korea, Japan, and some Southeast Asian countries and European countries.

Currently it has 74 state- of-the-art factories across the world.

Sri Lanka's thriving apparel sector, which is the island's largest export, has a close relationship with the Japanese company.

"Around two years ago INOAC took a decision to transfer our production facility from China to Sri Lanka to produce and supply unique high quality polyurethane foam to the giants of the apparel industry in Sri Lanka," said Ken Miwa, executive managing director of INOAC Corp. "We are shifting at least 20 percent of our production from China to Sri Lanka."

INOAC first invested in Sri Lanka in 1959 when it commenced its first joint venture with Associated Motorways (AMW) in Sri Lanka.

INOAC is a Tier 1 producer of automotive components for Toyota, Nissan, Honda, Mitsubishi, Yamaha and several other renowned global brands.

Japan is Sri Lanka's second largest lender in 2013 behind China and currently 39 Japanese private investment projects are in operation.