In a move that will help India gain an advantage amid companies shifting their manufacturing base out of China in the wake of the COVID-19 pandemic, Japan has included India and Bangladesh in a list of relocation destinations.
Japan provides a subsidy to its manufacturers who shift their base out of China to the Association of Southeast Asian Nations (ASEAN).
Welcoming Japan’s decision to add India to the subsidy destination list, Indian Commerce Ministry sources said: “By expanding the scope of the subsidy programme, Japan aims to reduce its dependence on a particular region and to build a system which is able to provide a stable supply of medical materials and electronic components even in emergency”.
“The government has allocated 23.5 billion yen ($216.20 million) in 2020 supplemental budget for subsidy to encourage companies to disperse their manufacturing sites across ASEAN region”, said a ministry source.
Under the second round of applications, which began on 3 September, "projects that will contribute to the resilience of the ASEAN-Japan supply chain" were added, assuming relocation plans to India and Bangladesh, the source added.
Experts opine that the addition of India to the list of "China Exit"-subsidy locations will give a major fillip to India's manufacturing.
Senior Economic journalist Deepak Joshi told Sputnik, “The COVID-19 pandemic has exposed lacunas of the existing global supply chain, which has hitherto remained concentrated in the hands of few destinations. Countries like Japan want to diversify their supply chains, it comes as an opportunity for India, which will have to compete with Vietnam and Laos”, the official said.
Meanwhile, earlier today, Indian Commerce Minister Piyush Goyal said India’s exports as well as imports are showing positive trends.
Addressing a meeting with various trade councils, Goyal said, “The exports are approaching the last year’s levels, after making a sharp dip in April this year due to pandemic".
“Regarding imports, the positive thing is that the Capital Goods imports have not declined, and the reduction in imports has been seen mainly in crude, gold and fertilisers”.
He added that the trade deficit is reducing drastically and “our share in the global trade is improving, thanks to our resilient supply chains”.
Not only Japan, but multinational companies from other countries having a base in China are looking at India. In May this year, German shoe company Von Wellx announced it would shift its entire shoe production business from China to India.