After the COVID-19 pandemic, Japanese companies are moving forward to adopt the ‘China Plus One’ plan and diversifying their manufacturing and supply chains to reduce dependence on China. For this, they plan to establish production facilities in alternative nations, with India being a major country.
Deloitte Japan CEO (Chief Executive Officer) Kenichi Kimura stated, “Post-Covid) Japanese companies have been actively exploring China-plus supply chain strategies, with India emerging as a key destination. While some companies have returned to Japan, others are looking at India not just as a manufacturing hub, but as a gateway to high-growth markets like the Middle East and Africa.” He also said that India has overtaken China as the biggest destination for Japanese FDI (Foreign Direct Investment).
The FDI balance of payments from Japan to China has sharply declined, dropping from $13 billion in 2013 to $3 billion in 2023. On the other hand, India experienced a sharp rise in Japanese FDI, touching $6 billion in 2023. ASEAN nations have also gained significant FDI from Japan.
India’s domestic market and well-established business and talent network are the two key drivers of Japanese companies’ interest in the country. The Japanese government has actively supported this shift. Previously, China tried to hinder Apple production in India, but this will definitely impact China.
