India’s friend and ally Japan to give incentives to companies that shift base from China to India

Wonderful move!

Japan is all set to provide incentives in the form of subsidies to all companies wanting to shift base out of China, as the third largest economy of the world carries the mantle of anti-China sentiments and begins hurting the middle kingdom where it hurts them the most. Earlier, it was reported that the Japanese government had earmarked close to US $2.2 billion to help its manufacturers shift production out of China. 87 companies had so far registered with the country’s trade ministry to avail the said subsidies for shifting their bases out of China back to Japan, or other friendly countries.

Turning its eyes to South Asia and ASEAN, the Japanese government has now also included India to the list of nations to which Japanese companies can shift their operations to avail this incentive. Bangladesh too finds a mention in the list of nations which companies shifting their manufacturing to will be rewarded with. By expanding the scope of the subsidy programme, Japan aims at reducing its dependence on a particular region (China) and to build a system which is able to provide a stable supply of medical materials and electronic components even in an emergency, Nikkei Asian Review reported.

Japan has taken to incentivise companies looking to shift operations out of China in order to “diversify its supply chains”. The heavily China-dependent supply chain of Japan came to a standstill as the COVID-19 pandemic peaked in the CCP-controlled country. By recalling companies back to Japan, and also rewarding them if they shift operations to countries like India, Vietnam, Laos and Bangladesh, Japan is effectively, under the premise of diversifying its supply chains, ringing the death knell of the already overestimated Chinese economy.

The names of India and Bangladesh have featured in the list of nations which Japan wants its companies to shift operations to in conjunction with the second round of applications which began on September 3, Livemint reported. Under the first round of applications, a total of 87 companies signed up with the Ministry of Trade to move manufacturing units out of China, with 57 moving back to Japan and 30 to different Southeast Asian nations like Vietnam, Thailand, and Laos. The Japanese government would pay 70 billion yen (or $653 million) to these companies as an incentive for moving factories outside China.

There are 1,441 Japanese companies registered in India, up from 1,369 in 2017. The move by Japan at incentivising its companies to shift operations out of China to countries like India will go a long way in dethroning the middle kingdom of its status as a global supply hegemon. Japan has led the way in showing the world that it isn’t very difficult to make China shiver. By incentivising its companies to shift base to countries like India, which are China’s enemies, Japan is poking Xi Jinping in a manner no one has before.

India, meanwhile, is slated to benefit immensely with the said move, as companies currently based in China find it rewarding to shift operations to the South Asian country, which under the leadership of Prime Minister Modi is in any case emerging as an extremely business friendly nation with the most amiable of tax regimes in the world.