India-Japan Economic Partnership Strengthens with Increased Investments and New Areas of Cooperation

New Delhi, March 6, 2025: India and Japan are strengthening their economic partnership, with a strong focus on investment, emerging technologies, and people-to-people cooperation. The discussions took place at the 48th Joint Meeting of the India-Japan and Japan-India Business Cooperation Committee, organized by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Japan Chamber of Commerce and Industry (JCCI).

Japan has already invested 3.8 trillion yen in India within the first two years of its commitment to invest 5 trillion yen over five years, a target set in 2022. This significant financial inflow is expected to drive growth in key sectors such as semiconductors, artificial intelligence, critical technologies, and small and medium enterprises (SMEs).

Expanding Business Ties and Workforce Collaboration

Japan, facing an aging population, is looking to India to meet its workforce requirements. Increased mobility and cooperation between professionals from both countries are expected to strengthen industrial collaborations. Many Japanese companies are also keen to expand their presence in India, particularly in sectors like electronics, chemicals, automobiles, and green mobility. Currently, about 1,500 Japanese companies operate in India, and stakeholders aim to multiply this number in the coming years.

Additionally, Japan sees India as a key business partner for expanding trade and investments in Africa. The Japanese Ministry of Economy, Trade, and Industry (METI) is working on establishing frameworks that will enable Japanese companies to use India as a base for their African ventures. METI has allocated approximately 1.5 billion yen (USD 10 million) from its Global South budget for industrial human resource exchange programs with India.

Boosting Investments and Strengthening the Supply Chain

A study by FICCI and Shardul Amarchand Mangaldas & Co. highlighted the need for greater integration of Japanese businesses in India's economy. It noted that while Japanese companies in Southeast Asia contribute significantly to Japan’s global supply chain, their Indian counterparts primarily cater to local and regional markets rather than focusing on exports to Japan.

To strengthen India’s role in Japan’s supply chain, stakeholders emphasized the need for deeper business collaborations, particularly in the MSME sector. Indian MSMEs can benefit from Japan’s expertise in manufacturing and production efficiency, while Japan can leverage India’s growing industrial base.

The meeting also highlighted successful collaborations between Indian and Japanese firms under initiatives like "Make in India" and "Make for the World." Japanese businesses are expanding their operations in India, particularly in supply chains for semiconductors and other high-tech industries.

Future Prospects and Milestones

India and Japan’s economic ties are expected to deepen further as both countries gear up for future milestones. The 50th India-Japan Business Cooperation Committee meeting in 2027 will coincide with the 75th anniversary of diplomatic relations between the two nations and FICCI’s centenary celebrations.

The discussions at the meeting emphasized that the India-Japan economic relationship is built on mutual interests in investment, technology, and sustainable development. As both nations continue to explore new areas of cooperation, the partnership is expected to play a key role in global trade and economic growth.

Source: Federation of Indian Chambers of Commerce and Industry (FICCI)