Japanese manufacturers will now be eligible for subsidies if they move production from China to India or Bangladesh, in an expansion of a government program aimed at diversifying the country’s supply chains.
By expanding the scope of the grant program, Japan aims to reduce its dependence on a particular region and build a system that is capable of providing a stable supply of medical supplies and electronic components even in an emergency, reports Nikkei Asian Review.
The government has allocated 23.5 billion yen ($ 221 million) in the 2020 supplemental budget for the subsidy to encourage companies to disperse their manufacturing sites in the ASEAN region.
Along with the second round of applications that started on September 3, projects that will contribute to the resilience of the ASEAN-Japan supply chain were added to the list, assuming relocation plans to India and Bangladesh.
The second round of application is aimed at feasibility studies on the decentralization of manufacturing sites, the experimental introduction of facilities and the implementation of model projects. The total amount of subsidies to be provided is reported to reach several billion yen, Nikkei said.
The supply chain of Japanese companies currently relies heavily on China. During the COVID-19 pandemic, supplies were cut off.
In the first round of applications that closed in June, the Japanese government approved 30 manufacturing projects, including Hoya’s electronic components manufacturing project in Vietnam and Laos, and provided subsidies of 10 billion yen.
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