India-Japan Relations, Background, Drivers of Cooperation and Challenges

Context: Prime Minister Narendra Modi recently travelled to Japan for the 15th India-Japan Annual Summit, his first with PM Shigeru Ishiba.

Key Takeaways from PM Modi’s 2025 Visit to Japan

• Investment Pledge: Japan to invest JPY 10 trillion (~USD 68 bn) in India over the next decade, doubling the earlier commitment.
• Economic Security Initiative: Strengthening supply chain resilience in semiconductors, critical minerals, clean energy, and telecom.
• AI & Digital Cooperation: Launch of India-Japan AI Initiative and Digital Partnership 2.0.
• Defence & Security:
  • Joint Declaration on Security Cooperation
  • Institutionalised NSA-level dialogue for the first time.
• Space Collaboration: ISRO-JAXA agreement on Chandrayaan-5 (Joint Lunar Polar Exploration Mission).
• Green Energy: Sustainable Fuel Initiative, Battery Chain, Clean Hydrogen & Ammonia partnerships.
• Human Resource Exchange: Action plan for 500,000 exchanges; 50,000 skilled Indians to work in Japan.
• Northeast Focus: MoU with Assam–ASEAN Holdings → investments in infrastructure, agro-industries, logistics.
• Make in India, Make for the World: Japanese JVs (Toyota–Suzuki, Nippon Steel, Tata–Fujifilm) will boost exports of EVs, speciality steel, and semiconductors to Africa, ME, and SE Asia.

India-Japan Relations: Background

• India and Japan share a special strategic and global partnership (2014), reflecting converging economic, political, and security interests.
• Historically, ties have been marked by civilizational goodwill (Buddhism, post-WWII support, Japan’s aid in India’s early industrialisation).
• Over the years, the partnership has evolved:
  • 2000: “Global Partnership.”
  • 2006: “Strategic and Global Partnership.”
  • 2014 onwards: “Special Strategic and Global Partnership.”
• In the 21st century, their relationship has been redefined by the China factor, Indo-Pacific geopolitics, and economic complementarity.

Current Drivers of Cooperation

Economic & Investment Cooperation

• Japan is India’s 5th largest investor, with over USD 38 bn FDI inflows (2000–2023).
• Trade: $22.8 bn in 2023–24; $21 bn (Apr–Jan 2024–25).
  • India exports: chemicals, vehicles, aluminium, seafood.
  • Imports: machinery, steel, copper, reactors.
• Key sectors: infrastructure, steel, automobiles, semiconductors, renewables, and real estate.
• Japanese ODA (Official Development Assistance) has funded mega projects like Dedicated Freight Corridors, industrial corridors, and connectivity projects in Northeast India.

Technology & Innovation

• Digital Partnership (2018) → now upgraded to Digital Partnership 2.0.
• Focus on AI, semiconductors, rare earths, IoT, cybersecurity, and start-up linkages.
• Japanese firms like Fujitsu, Tokyo Electron, and Suzuki are integrating Indian SMEs into global supply chains.

Defence & Security

• Key Agreements:
  • Joint Declaration on Security Cooperation (2008)
  • Defence Cooperation & Exchanges MoU (2014)
  • Information Protection Agreement (2015)
  • Reciprocal Supplies & Services Agreement (2020)
  • Co-development of UNICORN naval mast (2024)
• Exercises: Malabar, Milan, JIMEX, Dharma Guardian, Coast Guard drills.
• Dialogue mechanisms: Defence Ministers’ meetings, Service Chiefs’ visits, Joint Staff Talks (2024).

Green Energy & Sustainability

• Collaborations on clean hydrogen, ammonia, biogas, sustainable fuels, and battery supply chains.
• Japanese investments in rural biogas projects (e.g., Suzuki–NDDB in Gujarat).

People-to-People & HR Exchange

• Tourism: 2023–24 celebrated as Year of Tourism Exchange (“Connecting Himalayas with Mount Fuji”).
• Diaspora: 54,000 Indians in Japan, mostly IT professionals & engineers.
• Demographic complementarity: Japan’s ageing population ↔ India’s young workforce.
• India–Japan Talent Bridge: Target of 5 lakh exchanges in 5 years, with focus on semiconductors, AI, robotics, and IT.
• Career events at IITs, BITS, IISc, DU → direct recruitment by Japanese firms.

Regional & Global Cooperation

• Cooperation through the Quad (India, US, Japan, Australia).
• Coordination in the Asia-Africa Growth Corridor and TICAD (Tokyo International Conference on African Development).
• Japan strongly supports India’s role in the United Nations Security Council reform.

Challenges in India-Japan Relations

• Economic Delivery Gap: Despite high pledges, actual investment inflows are sometimes slower than commitments due to regulatory hurdles.
• China Factor: While both share concerns, Japan remains economically tied to China; balancing between Beijing and New Delhi creates policy caution.
• Trade Imbalance: Bilateral trade (~USD 21 bn, 2023) remains below potential; heavily tilted in Japan’s favour.
• Labour & Cultural Barriers: Indian workers in Japan face language, cultural, and visa challenges.
• Project Delays: Flagship projects like the bullet train face cost overruns, land acquisition issues, and delays.
• Geopolitical Divergences: While Japan aligns closely with the US, India seeks strategic autonomy in energy (e.g., imports from Russia), occasionally causing policy mismatches.

Way Forward

Deepening Economic Integration

• Expand beyond infrastructure to supply chain resilience partnerships, digital economy, and startup ecosystems (As agreed during the latest summit).
• Accelerate high-profile projects (bullet train) to signal credibility in bilateral cooperation.

Strategic Coordination

• Align Indo-Pacific strategies-India should integrate Act East with Japan’s FOIP vision.
• Strengthen defence cooperation through joint production, technology transfer, and cybersecurity partnerships.

Balancing China Factor

• Work on issue-based coalitions (maritime domain awareness, resilience in rare earth supply) without over-dependence on US alignment.
• Use Japan’s economic leverage and India’s strategic weight to balance China without confrontation.

Bridging Russia Divergence

• Create space for dialogue: Japan can understand India’s Russian dependence; India can align selectively with G7+Japan on humanitarian and global governance issues.

Cultural Diplomacy & Human Capital

• Scale up academic exchanges, skill mobility, and language training.
• Harness soft power (Buddhism, Yoga, Anime diplomacy) to strengthen societal connections.

Third-Country Cooperation

• Expand India–Japan collaboration in Africa, Southeast Asia, and the Indian Ocean Region for infrastructure and capacity building.
• Eg: Asia-Africa Growth Corridor (AAGC) could be revived to counter China’s BRI.

India-Japan relations are anchored in shared democratic values, complementary economies, and converging security interests in the Indo-Pacific. A stronger partnership between the two is not just bilateral – it is pivotal for shaping a multipolar, stable, and rules-based Indo-Pacific order

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