While the India-Japan partnership, among other things, aims to balance China’s growing hegemony in the Indo-Pacific, both New Delhi and Tokyo also seek practical and peaceful cooperation with Beijing. India and Japan are thus seeking to develop resilient supply chains in critical sectors, including semiconductors, energy security, and clean technology.
ThePrint reviews the evolving nature of Indo-Japanese ties in terms of regional security, trade, investment, and co-operation, including how Indo-Japanese strategic interests are increasingly converging in North East India and the larger Bay of Bengal region through collaborative connectivity and infrastructure projects.
‘Confluence of the Two Seas’
A major catalyst for closer ties was late Japanese PM Shinzo Abe, who in his seminal speech “Confluence of the Two Seas” to India’s Parliament in 2007, outlined his vision of the Indo-Japan strategic partnership on the basis of a Free & Open Indo-Pacific (FOIP) as part of a broader rules-based global order.
Abe was also instrumental in bringing together India, Japan, Australia and the US to form the QUAD (Quadrilateral Security Dialogue) to counter concerns over growing Chinese hegemony. Given Beijing’s growing naval expansion and maritime disputes in the South & East China Seas, the QUAD grouping is envisioned as a stabilising force for a peaceful, rules-based Indo-Pacific region.
The Indo-Japan defence partnership was strengthened in 2015 with both countries signing a transfer of defence equipment and technology agreement. A major outcome of the agreement was the November 2024 memorandum for co-development of UNICORN (Unified Complex Radio Antenna) masts which provide advanced stealth capabilities to naval vessels.
The two nations elevated defence ties in 2020 through an agreement on reciprocal provision of supplies and services. Both countries have also engaged in the Malabar military exercises since 2007.
Balancing geopolitical realities
Despite their concerns over China, both New Delhi and Tokyo have adopted an apparent pragmatic approach based on mutual co-operation with Beijing where possible, and strategic opposition when necessary. While India remains committed to a free Indo-Pacific and the QUAD, the Modi government has a more “inclusive” Indo-Pacific vision that is open to constructive co-operation with China.
China is currently the largest trading partner for both Japan and India. However, Beijing’s geopolitical leverage over key supply chains is necessitating greater Indo-Japanese co-operation in critical sectors, including semiconductors, critical minerals and renewable energy.
Indo-Japanese strategic co-operation is also likely to hedge against increased uncertainty over long-standing American commitments to free trade and security in the region. Such concerns seem justified in the wake of the Donald Trump administration’s earlier tariffs against India and Japan, and Washington’s decision to rename the US Indo-Pacific Command to the long-standing US Pacific Command, signalling a potential return to American isolationism.
Strategic trade & supply chains
Indo-Japan trade increasingly reflects the strategic partnership between both nations.
The 2011 India-Japan Comprehensive Economic Partnership Agreement (CEPA) reduced tariffs on a range of goods and services, helping boost bilateral trade from $5 billion in 2004-05 to $27.4 billion in 2025-26, according to data from the Embassy of India, Tokyo.
Exports from Japan to India in 2025-26 were $21.43 billion and imports were $6.04 billion, revealing a large trade surplus in Japan’s favour. However, trade between the two nations suggests mutually beneficial high-value supply-chains, with India emerging as a major exporter of motor-vehicles (worth $683 million) and smartphones (worth $388 million) to Japan in 2024, according to the Observatory for Economic Complexity.
From the year 2000 until June 2025, Japanese FDI investment in India amounted to $44.97 billion, making Japan the fifth largest investor in India. Japanese FDI into India has mainly been in automobile, electrical equipment, telecommunications, chemical, financial (insurance) and pharmaceutical sectors.
Despite this upward trajectory, Japan’s trade with India lags considerably when compared to Japan’s trade with other Asian trade partners like China, South Korea, Thailand, Vietnam. India is currently Japan’s 14th largest trading partner, whereas Japan is India’s 10th largest trading partner, according to data from the Embassy of India, Tokyo.
While surveys indicate that Japanese companies have a favourable view of investing in India, there are nonetheless concerns over infrastructure, ease of business, and cheaper regional competitors.
Elaborating on these points, Dr Gaurav Dutta, an associate fellow and Japan expert at Delhi-based think tank Vivekananda International Foundation, told ThePrint: “Despite infrastructure bottlenecks, the Japanese have started investing in India because they do not want to put all their eggs in one basket, that is China.”
Beyond these concerns, both India and Japan are now increasingly co-operating across key sectors including security, trade, technology, connectivity, infrastructure, clean energy, and human resources.
At a webinar organised by Asian Confluence think-tank, former Japanese ambassador to India Kenji Hiramatsu explained that resilient Indo-Japanese supply chains in energy and critical minerals remain a central focus of PM Takaichi’s “updated vision” for a Free & Open Indo-Pacific.
Development assistance
India is the largest recipient of Japanese ODA amounting to 4800 billion yen (Rs 2.8 lakh crore or $29.6 billion) in cumulative terms, according to Japan International Cooperation Agency (JICA). This makes Japan the largest bilateral donor to India, followed by the US.
Japanese ODA is administered by the JICA through long term loans and grants that support India’s economic development through projects in key sectors, including transport, energy generation, water, sanitation, forestry, agriculture, and health.
Since 2007, the largest share of Japanese ODA (62%) has been extended for major transportation projects including mass rapid transit metro projects (Delhi, Mumbai, Chennai, Ahmedabad, Kolkata and Patna), the 1500 km Delhi-Mumbai Dedicated Western Freight Corridor, and the Mumbai-Ahmedabad High-Speed Rail project.
The second largest share of ODA loans (12%) have been committed for ‘Water & Sanitation’, especially for improving urban water supply and combating river pollution in cities across the country.
Partner in North-East & beyond
The Indo-Japanese strategic partnership is increasingly converging in regional connectivity and infrastructure projects across the Indo-Pacific region, especially around the Bay of Bengal and India’s North-East.
Both New Delhi and Tokyo view the North-East as a potential land corridor and regional connectivity hub between South Asia and South East Asia. India’s ‘Act East Policy’ and Japan’s vision for a ‘Free & Open Indo-Pacific’ find strategic convergence in the region, with both countries launching an ‘Act East Forum in 2017’ to promote deeper collaboration.
India has otherwise limited foreign collaborations in the sensitive border region.
A major focus of the India–Japan Act East Forum is improving regional connectivity through Japanese-supported infrastructure projects, including the approximately 750-km North East Road Network Connectivity Improvement Project financed by JICA.
At the Asian Confluence webinar, Shigeharu Satake, president of Japanese think tank Nomura Research Institute, said ODA projects in the North-East seek to improve the region’s connectivity infrastructure in order to attract greater foreign investment.
While PM Takaichi’s visit was shifted to Delhi instead of Guwahati over logistical reasons, there are still expectations of major Japanese investment in the region, including for a ‘Japanese industrial township’ in Jagiroad, Assam. In this regard, Satake mentioned that two Japanese companies, Fujifilm and Tokyo Electron, have signed an MoU to supply materials and equipment.
Beyond connectivity, Japanese ODA in the North-East is also focused on forest management, clean energy and ecosystem conservation initiatives in the region. Japanese ODA is also supporting healthcare infrastructure, including a medical college in Nagaland and a Cancer Research Centre in Mizoram.
Human connections
Sabyasachi Dutta, Executive Director of Asian Confluence, told ThePrint that while Indo-Japanese collaborations can have transformative impact, cultural differences can create challenges and opportunities for both sides.
“The Japanese are known for their meticulous work-ethic and high technical standards… so we really have to pick up our socks to match their energy and detail-oriented outcomes,” he said.
For Dutta, the key lies in encouraging greater people-to-people exchanges to generate greater public interest and interaction between both nations. He pointed out that Asian Confluence organises an annual India-Japan Intellectual Conclave which brings together politicians, policymakers, civil society persons and scholars from both countries.
Given India’s demographic dividend and Japan’s ageing population, people-to-people exchanges are seen as a natural fit to address India’s employment challenges and Japan’s labour shortages. As part of this, both governments are targeting 5 lakh Indian students and workers in Japan over five years to mitigate the labour shortage of an ageing Japanese population and harness India’s demographic dividend.
(Edited by Nida Fatima Siddiqui)
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