Japan to subsidise manufacturers if they shift to India from China: Report

The subsidy aims to reduce Japan's reliance 'on a handful of links' in its supply chains, says Nikkei Asian Review.

Japanese manufacturers will be eligible for government subsidies if they shift production out of China to India or Bangladesh, said a media report on Friday.

The subsidy programme aims to diversifying Japan's supply chains. Manufacturers can receive subsidies for feasibility studies and pilot programs. The total amount granted is expected to run into the tens of millions of dollars, said the Nikkei Asian Review.

The subsidy aims to reduce Japan's reliance "on a handful of links in its supply chains", particularly China, and ensure a steady flow of such products as medical supplies and electrical components in an emergency, said the Nikkei report.

Prime Minister Narendra Modi, while to speaking to an Indo-American business summit, on Thursday called for a coordinated global effort to get back growth in the coronavirus pandemic.

"This pandemic has also shown the world that the decision to base global supply chains should not only be based on cost but also on trust. Along with affordability of geography, companies are now also looking at reliability and policy stability. India is the location that has all of these qualities. As a result, India is also becoming one of the leading destinations of foreign investment," Modi said.

The Nikkei report said Japan’s first round of subsidies announced in July granted more than 10 billion yen to 30 companies relocating manufacturing to Southeast Asia, such as Hoya, which is moving production of electronic components to Vietnam and Laos. Another 57 are receiving support for shifting production facilities to Japan.