Economy

Focus on auto, steel, textiles, petroleum, IT under India-Japan-Australia supply chain initiative

Amiti Sen New Delhi | Updated on November 06, 2020 Published on November 06, 2020

Japan’s decision to offer financial assistance to Toyota-Tsusho, Sumida to diversify to India will boost SCRI

Automobiles and parts, petroleum, steel, textiles, financial services and IT are some of the focus sectors identified under the Supply Chain Resilience Initiative (SCRI) recently entered into by India, Australia and Japan to diversify supply sources and attract Foreign Direct Investment (FDI), as per sources tracking the initiative.

The Japanese government’s decision to offer financial assistance to two companies — Toyota-Tsusho and Sumida — to diversify their manufacturing bases to India has given a further boost to the SCRI, an official confirmed to BusinessLine.

Relocating from China

The assistance is under Japan’s scheme to finance its companies relocating from China to certain countries in Asia including India and Bangladesh.

“Japan to offer aid to two companies moving manufacturing base from China to India. We will continue to work with Japan and Australia, as part of our joint Supply Chain Resilience Initiative to ensure a transparent trade and investment environment,” Commerce & Industry Minister Piyush Goyal tweeted on Friday.

While a handful of sectors have been identified tentatively as focus areas under the SCRI, intense stakeholder consultations would be required to fine-tune this list. “More interactions between the three countries are expected on taking forward the SCRI,” the official said.

Tri-lateral co-operation

The SCRI, launched by India, Japan and Australia in September this year, is also viewed by many as an arrangement to build a partnership that could help the nations reduce their dependence on China.

The joint statement of the trilateral Ministers’ meeting at the launch of the SCRI indicated that the initiative would take a lead in enhancing the resilience of supply chain in the Indo-Pacific region including diversification of supply sources and increase competitiveness of sectors.

It would also seek to attract FDI in the region and strengthen mutually complementary relationship among the participants, the source said.

The activities that could be possibly explored for increasing resiliency of supply chains are exploring alternate and reliable sources of supplies of critical products, using supply chains amongst the three countries to revamp domestic production, hold investment and trade promotion events, digitise trade documents and set up mechanisms to address trade and investment barriers.

The Japanese government also decided earlier this year to grant financial assistance to around ten of its companies, including automobile major Suzuki Motor Corp and optical device manufacturer Olympus Corp, for investing in innovative solutions in India in tie-ups with Indian IT firms, an official has said.

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Published on November 06, 2020
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