Japan would subsidize companies leaving China to move to India

5th September 2020

5th September 2020

Japan is encouraging its companies exiting China to move to India by way of subsidies.

Japan’s ministry of economy, trade and industry (Meti), after a meeting between India, Japan and Australia which decided to advance cooperation on building resilient, trusted supply chains, has announced it would subsidize its companies leaving China to go to India and Bangladesh, among a list of Asean countries.

Japan is initiating a Supply Chains Resilience Initiative (SCRI) to built alternative supply chains. India’s commerce minister, Piyush Goyal, after a trilateral meeting with trade ministers of Australia and Japan said:

“Diversification of supply chain is critical for managing the risks associated with supply of inputs, including disciplining rice volatility. We could provide the core pathway for linking value chains in the region by creating a network of reliable, long-term supplies and appropriate capacities.”

It’s now on India to attract Japanese firms which are seeking alternative to China. It is reckoned that tech sectors such as IT-ITES, AI and IoT could benefit immensely. The industries such as chemical and food processing too are high on the list. Japan would be keenly watching the steps India take to encourage its companies.

Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe would hold their last virtual meeting on September 10. It is expected that the two countries would sign the Acquisition and Cross Servicing Agreement (ACSA) which would allow the two countries to share the military logistics. India signed a similar pact with Australia in June. The summit comes at a time when both Japan and India are worrying about China’s expansionist mode.  Abe, as is known, is laying down his office soon due to health issues.

On September 10 itself, foreign minister S. Jaishankar would be in Moscow for a Shanghai Cooperation Organisation (SCO) meeting among foreign ministers of its member-nations. Jaishankar is expected to hold meeting with his Chinese counterpart Wang Yi.   

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