Major blow to China; Japan adds India, Bangladesh to relocation subsidiary

New Delhi: In another blow to China, Japan has added India, Bangladesh to its relocation subsidiary, resulting which Japanese manufacturers will now be eligible for subsidies if they shift production out of China to India or Bangladesh.

Japan, through this expansion program aims to diversifying the country’s supply chains.

The Ministry of Economy, Trade and Industry (METI) also provides subsidies to Japanese manufacturers that shift their manufacturing units from China to the other ASEAN countries.

It has been learnt that Japan’s supplementary budget for 2020 fiscal has earmarked 23.5 billion yen for companies that move production to the Southeast Asian countries.

By expanding the scope of the subsidy program, Japan aims to reduce its dependence on a particular region. It wants to build a system which is able to provide a stable supply of medical materials and electronic components even during emergency situations.

Supply chain of Japanese companies heavily relies on China however, during the COVID-19 pandemic, the supply was cut off.

The first round of application closed in June, during which Japanese government approved 30 manufacturing-related projects, including HOYA’s manufacturing of electronic components project in Vietnam and Laos. It has provided subsidies overall total of 10 billion yen.

It may be recalled that Minister of Commerce and Industry Piyush Goyal had in August said that India and Japan are looking to have trusted partners from authentic investors.

Speaking at the third Edition of the Invest India Exclusive Investment Forum – Japan Edition, through video conference. (Digital Roadshow) for Japanese companies, he said that it is important that Japan and India expand trade and business relationships.

At the summit, Secretary, Department of Industry and Internal trade Guruprasad Mahapatra said India is planning to set up the 13th Japanese industrial township in Assam, a move aimed at promoting domestic manufacturing and strengthening economic ties between the two countries. He said that they are working on GIS enabled data base of industrial areas and clusters across the country.