India, Japan and Australia are working on a supply chain agreement to counter dependence on China by creating a alternative.
The countries plan to launch a trilateral Supply Chain Resilience Initiative (SCRI), which was first proposed by Tokyo, according to a report by The Economic Times.
The commerce and trade ministers of the three countries might discuss the initiative for the first time at a meeting next week, the report added.
Moneycontrol could not independently verify the story.
Japan's Ministry of Economy, Trade and Industry approached India and highlighted the urgent need to work on the initiative, said the report.
Tokyo has said it was in favour of launching the SCRI by November, the report said. ASEAN (Association of Southeast Asian Nations) may later be invited to join the global supply chain.
India has taken the supply chain proposal seriously and has taken the decision at the highest levels of the government, the report said.
India-China ties have been strained amid border tensions along the Line of Actual Control (LAC). In June, there was a clash between Indian and Chinese soldiers at Galwan Valley in Ladakh.
Following the border scuffle, India amended its FDI norms and has started taking a closer look on Chinese money pouring into Indian entities.
India has also introduced sops to attract global investors in an effort to compete with China and offer an alternative.
For instance, the government’s production linked incentive (PLI) scheme, which offers incentives to companies engaged in manufacturing mobile phones and specified electronic components in India, has drawn huge interest from global and local original equipment manufacturers (OEMs).
With no signs of de-escalation at the border, the government is mulling further action against China on the economic front.
This comes as China's People’s Liberation Army, as per latest reports, is still holding forward positions on Pangong Tso and Gogra-Hot Springs area of Ladakh.