Japan to offer subsidy to companies shifting from China to India: Report

Under Japan’s new government program, manufacturers that shift their production out of China to India or Bangladesh will now be eligible for subsidies. The program is aimed at diversifying Japan’s supply chains.

The Japanese government has allocated 23.5 billion yen ($221 million) in its 2020 supplementary budget for companies that move production to Southeast Asian nations, reports Nikkei Asian Review.

In the second round of applications that began on September 3, Japan's Ministry of Economy, Trade and Industry said that it added "projects that contribute to the resilience of the Japan-ASEAN supply chain" to the list of qualifying moves, eyeing relocations to countries such as India and Bangladesh.

According to the Nikkei report, the updated subsidy programme aims to reduce Japan's reliance on a handful of links in its supply chains, particularly China, and ensure a steady supply of medical products and electrical components during an emergency.

Earlier in July, the Washington Post reported that after Covid-19 disrupted supply chains and “exposed an overreliance on Chinese manufacturing”, Japan was paying 87 companies to “exit China” and shift production to Japan or ASEAN countries.

In the first round of application which was announced in July, the Japanese government granted over 10 billion yen to 30 companies relocating manufacturing to Southeast Asia, including Hoya, which is moving production of electronic components to Vietnam and Laos, according to the Nikkei Asian Review report. Another 57 companies are receiving support for shifting production facilities back to Japan.