induction motor is an inductive device and we know that in 
inductive circuit current lags behind voltage due to the 
inductive reactance of the motor. so that the phase angle 
between voltage and current will increase. and the cosine 
angle i.e. P.F. will decreases.to improve the p.f we have 
to supply leading Kvar to the system. it is possible by 
different way. either use capacitor bank which will supply 
leading kvar to the syswtem and overall lagging kvar will 
decreases and if we see the power triangle then the angle 
between KW and KVA will decrease so that the p.f. will 
improve. second method is to run synchronous motor on 
leading p.f.in parallel with the system.

the above answer saying synchronous motor can be used but 
we never see a synchronous installed near indution motor. 
We always uses static capacitors to improve the overall PF. 
why because only in High end generating stations and 
substations the synchronous motor can be used to imrove 
system PF. for medium and small loads we can go for static 
capacitor bank.

We can use capacitors to improve power factor in 
Synchronous Alternators.