India key to Japan’s ‘China plus one’ strategy, says JICA India chief

New Delhi: India is a key partner in Japan’s ‘China plus one’ strategy but its global supply chain integration needs to match that of Southeast Asian nations, Takeuchi Takuro, chief representative of the Japan International Co-operation Agency (JICA) in India, said on Thursday.

Takuro told Mint in an interview that both the Indian and Japanese governments were working on strengthening the South Asian country's presence in Japan's global supply chain, and promoting investments. "In the China context, India is one of the most important (partners) for Japan," he said, adding that JICA is determined to invest more in the country.

JICA, which is under the Japanese government, has committed to official development assistance (ODA) loans worth 4,163 billion yen (about ₹2.36 trillion at current rates) between 2014-15 and 2023-24, with loan commitments in 2023-24 standing at 809.4 billion yen ( ₹46,063 crore) in sectors such as railways, roads, water and sanitation, agriculture and forestry, health and industry.

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‘China-plus-one’ strategy is a business approach in which companies diversify their manufacturing and supply chains by expanding operations to countries beyond China to reduce their dependence on a single hub and minimise risks.

Several Japanese companies have adopted the strategy to explore and invest in India as they look to diversify their supply chains while tapping the country’s economic potential.

Agreements signed

On Thursday, JICA signed ODA loan agreements worth about 276 million yen ( ₹15,655 crore) with the Indian government for key infrastructure and social development projects, including the extension of the Delhi Mass Rapid Transport System Project, the Tamil Nadu Investment Promotion Program, and the creation of a Punjab Biodiversity and Natural Resources Conservation Project, among others.

"JICA is committed to engaging with India’s development efforts as a close partner through high-impact projects that foster economic growth, job creation, environmental sustainability, and improved livelihoods," Takuro said.

During FY24, Japan's foreign direct investment (FDI) in India was about $3.18 billion, making it the fifth-largest source of FDI for India. Cumulative FDI from Japan to India between 2000 and 2024 exceeds $43 billion.

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Speaking on private-sector investments in India, Takuro said small Japanese businesses had strong partnership potential in India and could enhance quality while supporting the ‘Make in India’ initiative. He added that the current economic slowdown in several parts of the world won't affect Japanese investments into India.

He also said JICA is interested in investing in green and renewable energy projects, including green hydrogen and biogas. "Japan is supporting India’s journey toward its net-zero target, with JICA providing technical assistance to the Central Electricity Authority to develop a carbon-neutral roadmap for the power sector," he added.

Green loans

JICA's ODA loan agreements on Thursday also included investments into emerging and green sectors to promote sustainable, future-oriented development, especially in Tamil Nadu, and projects aimed at enhancing ecosystem services and mitigating the impact of climate change in Punjab.

JICA's projects in Punjab include community-based agro-forestry initiatives, biodiversity conservation, watershed management, and institutional strengthening of the department of forests and wildlife preservation and its allied institutions.

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"Punjab’s ecosystem is under growing pressure due to deforestation, rapid agricultural expansion, groundwater depletion and climate change. This project is a crucial step toward restoring natural resources, and supporting sustainable forestry and livelihoods while strengthening climate resilience," Takuro said.

"By investing in critical sectors for Indian development such as infrastructure, investment promotion, biodiversity and natural resources management, and fisheries, we aim to contribute to the country’s sustainable and inclusive progress towards Viksit Bharat," he added.