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Japanese manufacturers to get 'China exit' subsidy for shifting base to India

Japanese government's programme aims to reduce Japan's dependence on a particular region -- especially China -- and to ensure a steady supply chain of products like -- medical supplies and electrical components -- in case of any emergency

Currently, Japanese companies' supply chain relies heavily on China - Representative Image Currently, Japanese companies' supply chain relies heavily on China - Representative Image

The Japanese government, in order to diversify the country's supply chains, has added India and Bangladesh to the list of relocation destinations for businesses moving their production sites from China to Association of Southeast Asian Nations (ASEAN) region. This will make Japanese manufacturers eligible for government subsidies if they shift manufacturing out of China to ASEAN countries.

The Japanese Ministry of Economy, Trade and Industry, while opening up a second round of applications, added projects that contribute to the "resilience of the Japan-ASEAN supply chain" to list of qualifying moves, eyeing relocations to countries like India and Bangladesh, reports Nikkei.

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The Japanese government's supplementary budget for FY20 earmarked 23.5 billion yen for the businesses that want to move their production to Southeast Asian nations. The country's manufacturers can now receive subsidies for pilot programmes and feasibility studies.

The Japanese government's programme aims to reduce Japan's dependence on a particular region -- especially China -- and to ensure a steady supply chain of products like -- medical supplies and electrical components -- in case of any emergency. Currently, Japanese companies' supply chain relies heavily on China. The issue came to light during the COVID-19 pandemic when supplies from China were cut off.

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The first round of subsidies, which was announced in July, granted around 10 billion yen to 30 companies relocating their production sites to Southeast Asia. Another 57 firms are also receiving support for moving manufacturing facilities to Japan.

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