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Prime Minister Narendra Modi met his Japanese counterpart Shinzo Abe.

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 an emergency, reports Nikkei Asian Review.

Japan also aims to decentralise its supply chain by reducing its dependence on a particular country for medical and well as electronic components supply. The Japanese government has allocated $221 million (or Rs 1,615 crores) in its 2020 supplemental budget as subsidy to encourage companies to disperse and shift to India and across the ASEAN region.

In conjunction with the second round of applications which began 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 targets feasibility studies on decentralising manufacturing sites, the experimental introduction of facilities and implementation of model projects. The total amount of subsidies which will be provided is reported to reach several billion yen, said Nikkei.

The supply chain of Japanese companies currently heavily relies on China. During the COVID-19 pandemic, the supplies were cut off.

 In the first round of application that closed in June, the Japanese government approved 30 manufacturing-related projects, including HOYA’s manufacturing of electronic components project in Vietnam and Laos, providing subsidies overall total of 10 billion yen.

This will further help India in not only improving the GDP and economy but provide huge amounts of jobs, development as Japanese manufacturing companies dominate the auto and tech sector.

Inputs from agencies