The implications of this package will be wide and far-reaching, both in terms of geopolitics as well as economics. Specifically, the decision to promote relocation of Japanese companies away from China, its largest trading partner, indicates a growing consensus in Japan to move its supply chains back to the country, or to other preferable countries such as Vietnam, Thailand and India. It points out that China has been rapidly losing its attractiveness among Japanese countries for a while now, an example of which can be seen from the fact that about 159 Japanese companies operating in China have relocated to comparable countries like Vietnam and Thailand.

“Such diversification and shifting of Japanese firms away from China is estimated to create a $730 billion economic opportunity for developing geographies like ASEAN and India. “The ongoing COVID-19 crisis presents a golden opportunity for India and Japan to further boost their already successful relationship,” the paper argues. There is little doubt in anyone’s mind that the post-Covid world will be starkly different from the one preceding it in many significant ways as the world looks towards an economic and social reset, it said. “Among other things, this pandemic has highlighted the world’s over-dependence on China, particularly in areas such as medical equipment and medical textiles, as a result of which, there has been a growing consensus between and within countries such as India and Japan about not only promoting their domestic industries but also diversifying their reliance on China for manufacturing activities,” it said.

The paper points out that these convergences bring Indian and Japanese interests closer and the opportunity presented by Japan’s announcement of funding its multinationals to relocate away from China, must be fully leveraged by India as the most preferable destination to secure such investments from Japan.