Japanese firms Toyoto-Tsusho, Sumida to shift production from China to India
Toyota-Tsusho is into infrastructure, chemicals and food business, in addition to Toyota's core, automotive business; Sumida is a component manufacturer for auto, medical equipment, electronics and power sectors
Two months after Japan, India and Australia decided to launch a Supply Chain Resilience Initiative (SCRI) to develop dependable sources of supply of raw materials, components etc. in the Indo-Pacific Region, two Japanese firms - Toyota Tsusho, a trading arm of Toyota Group and component maker Sumida Corporation - are planning to shift manufacturing base from China to India.
The $64 billion Toyota-Tsusho is into infrastructure, chemicals and food business, in addition to Toyota's core, automotive business. The $900 million Sumida is a component manufacturer for auto, medical equipment, electronics and power sectors. The Japanese government is known to be providing financial assistance to help home grown companies diversify their production and supply base to be more resilient to global shocks such as the disruption caused by COVID-19 induced lockdown.
A government official aware of the development said the three countries will be prioritising the sectors where the current volume of trade in goods and services are highly dependent on one region or country under the initiative. In addition to automobiles and chemicals and petrochemicals, sectors like steel, drugs and pharmaceuticals, textiles, financial services, IT services are all considered to be looked through the prism of SCRI.
The official said SCRI will encourage Foreign Direct Investment (FDI) in the region and strengthen mutually complementary relationship among the participants. The objective is to promote, expand and diversify trade and investment. Digitisation of trade documentation, activities for promotion of trade and investment, identification of sectors for cooperation, exploring other countries who could join in the initiative, capacity building, promotion of domestic manufacturing are all measures that are expected to help achieve this broad objective.
The SCRI initiative, originally piloted by Japan is meant to enhance the resiliency of supply chain in the Indo-Pacific region including diversification of supply sources and increasing competitiveness of sectors. A joint statement of the Trilateral Ministers meeting on September 1, 2020 had said the initiative will take a lead in delivering a free, fair, inclusive, non-discriminatory, transparent, predictable and stable trade and investment environment. While officials of the three countries were asked to work out the details of the initiative, the ministers (India was represented by Commerce Minister Piyush Goyal) agreed to invite other friendly countries in the region also to participate in the programme.
A trilateral institutional framework at the senior official level is also being thought of to explore alternate and reliable sources of supplies of critical products and use supply chains amongst the three countries to revamp domestic production.