Japan to aid two companies moving manufacturing base from China to India
Japan has agreed to offer financial assistance to two of its companies to diversify their manufacturing base to India as part of its recent initiative to provide subsidies to companies relocating from China.
They are: Toyota-Tsusho and Sumida. The move was announced following Indian Prime Minister Narendra Modi’s meeting with global investors on Thursday. Modi is to follow up Thursday’s round table discussions with one-on-one meetings with the investors, including some marquee Japanese players.
Toyota-Tsusho is looking to set up a rare earth metal facility, and Sumida is for automotive parts.”Work had been going on to seek to get these companies to India, but the Japanese side decided to provide assistance to make the process more attractive for the two companies,” said a government source.India and Japan have been seeking to build a coalition to counter China’s growing dominance and the ties have been strengthened following the outbreak of the Covid-19 pandemic.
Along with Australia, India and Japan had launched supply chain resilience initiative for Indo-Pacific, where the government had also urged Tokyo to expand the coverage of the financial assistance to India.
Japan had announced a $2-billion initiative, unofficially aimed at re-shoring some of its companies as well as diversifying into other markets. While a bulk of the funding is aimed at those entities that shift from China back to Japan, India and Bangladesh are among countries where assistance will be provided.
There are an estimated 30,000 Japanese companies that have production bases in China, which had emerged as the factory to the world, compared with 5,100 in India.
Recently, Japan External Trade Organisation (JETRO) had announced that it would help 10 Japanese companies to get into high-tech projects with Indian companies. The list included the likes of Suzuki and Olympus.
While Suzuki is working on IT infrastructure to develop a transit bus traffic control system in rural areas, Olympus and HCL Technologies are working on technologies to aid doctors.