Japan Bank for International Cooperation keen to invest in India’s semicon supply chain, says governor Nobumitsu

New Delhi: The Japan Bank for International Cooperation (JBIC), a public financial and export credit institution, is keen to support investments in India's semiconductor supply chain, governor Hayashi Nobumitsu said on Wednesday.

"We can share the supply chain with India...So that we can continue to have semiconductor supply chains with our friendly countries," Nobumitsu said at a seminar organised by the Centre for Social and Economic Progress (CSEP).

He said Japanese companies could help with supply chains for semiconductors in India, as the government under Prime Minister Narendra Modi is keen to make the South Asian country a hub. 

The Indian government plans to launch the next phase of the India Semiconductor Mission in the next six months, Electronics and Information Technology Minister Ashwini Vaishnaw said earlier this month adding that a significant amount of funding has been allocated for the next phase which will focus on developing new areas, including Greater Noida, as semiconductor hubs.

The semiconductor mission, which was launched in December 2021, has ₹76,000 crore allocated for production-linked incentives to help companies set up semiconductor fabs, testing facilities, and design houses in the country.

Highlighting India's growing appeal as an investment destination for developed countries like Japan, Nobumitsu said, “Earlier, (for investors) India was the investment destination for the future, as they were investing in China. But for the past two years, India has surpassed China as the short-term destination (for investment), partly because of China's unpopularity and India's rising popularity.”

In October 2023, government-backed JBIC and India's National Investment and Infrastructure Fund (NIIF) launched a $600 million fund for investing in climate and environmental initiatives in India, with the Japanese side contributing 51% of the corpus and the Indian side 49%.

The focus of the fund is on low-carbon emission strategies and environmental sustainability.

Apart from funding Japanese companies engaged in trade with India, JBIC has also funded several Indian companies.

In March, the state-backed NTPC group also entered into foreign currency loan agreements with the JBIC, aggregating to about  ₹1,650 crore for NTPC Ltd and NTPC Renewables Energy Limited (NREL).

While JBIC provided 60% of the facility amount, the balance provided by other commercial banks was under the JBIC's guarantee.

In August, the state-owned Power Finance Corporation (PFC) secured a loan of about ₹147 crore from JBIC for a wind energy project.

"We want to invest more in Indian startups in the area of environment," he added.

Nobumitsu said challenges for Japanese companies in India include cultural and dietary challenges, as well as red tape and delays in implementing laws. "However, we want to continue to work with India and resolve those challenges," he added.

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