India-Japan Ties Strengthen Amid Global Uncertainties

Strategic Insights -

The India-Japan bilateral relationship is growing stronger and deeper, with a special focus on strategic and global partnerships. Prime Minister Narendra Modi's upcoming visit to Japan is expected to further consolidate the ties between the two nations. The historical ties between India and Japan, two of Asia's leading democracies, have been reinforced by convergence in their regional and global outlooks. India's Act East Policy and Indo-Pacific Oceans Initiative align closely with Japan's Free and Open Indo-Pacific (FOIP) policy.

Key Takeaways:

  • The India-Japan relationship has been elevated to a Special Strategic and Global Partnership in 2014, with a focus on defense, trade, and investment cooperation.
  • The two countries have cooperated in multilateral platforms such as the Quad, International Solar Alliance (ISA), Coalition for Disaster Resilient Infrastructure (CDRI), and Supply Chain Resilience Initiative (SCRI).
  • India and Japan have exchanged notes on the current global scenario and are expected to share their strategic outlook in the wake of US tariffs and security commitments.
  • The two sides are likely to launch an economic security initiative focused on semiconductors, critical minerals, AI, telecommunications, and clean energy.
  • Japan has become India's largest Overseas Development Assistance (ODA) donor since 1958, supporting critical infrastructure and human development projects.
  • The two sides are expected to start a digital partnership involving AI and semiconductors, and focus on public infrastructure, as well as promote a bilateral energy partnership in hydrogen and renewable energy projects.
  • The Mumbai-Ahmedabad High Speed Rail project is a flagship project symbolizing advanced technology transfer and skill development, with a latest tranche of JPY 300 billion ($2.2 billion) signed in March 2023.
  • India and Japan will review progress in defense and technology transfers and upgrade the 2008 Joint Declaration on Security Cooperation to reflect the changing security environment.
  • The two countries will discuss the future of the Quad in view of President Trump's decisions and diversify and secure supply chains through the Supply Chain Resilience Initiative (SCRI).
  • Tourism, education, and people-to-people exchanges have been strengthened, with initiatives such as the Year of Tourism Exchange and the Skill Connect platform launched in 2023 to link Indian talent with Japanese employers.

Statistics:

  • Bilateral trade between India and Japan reached $22.8 billion in 2023-24, with imports from Japan outweighing exports.
  • India's main exports to Japan are chemicals, vehicles, aluminium, and seafood, while imports include machinery, steel, copper, and reactors.
  • Japan is India's fifth-largest source of Foreign Direct Investment (FDI), with $43.2 billion cumulative investment up to December 2024.
  • Annual inflows of Japanese FDI into India have been strong, with $3.1 billion in 2023-24 and $1.36 billion in 2024-25 (Apr-Dec).
  • Around 1,400 Japanese companies with nearly 5,000 establishments operate in India, with over 100 Indian companies present in Japan.
  • ODA disbursement by Japan to India stood at about JPY 580 billion ($4.5 billion) in 2023-24.

Sources:

  • "PM Modi leaves for Japan, to hold 15th India-Japan Annual Summit" (The Indian Express, August 29, 2024)
  • "India-Japan ties: A special strategic partnership" (The Times of India, August 29, 2024)
  • "India-Japan economic ties strengthened as PM Modi sets to visit Tokyo" (The Economic Times, August 28, 2024)
  • "India, Japan to launch economic security initiative, focus on semiconductors, AI" (The Hindu, August 29, 2024)
  • "India, Japan to enhance cooperation in Indo-Pacific, bilateral relations" (The Hindu, August 28, 2024)