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The relationship between India and Japan has transformed into a strategic partnership of mutual progress and prosperity. This alliance is underpinned by a synergy of business collaborations, spiritual affinity, cultural values, and deep-rooted civilisational ties that span centuries of historical interactions and shared beliefs. Both nations have made remarkable advancements in navigating the complexities of globalisation and technological advancements, exponentially strengthening their bond.
Our report explores the evolving relationship between both countries, highlighting increased bilateral engagements and joint initiatives spanning various industries. It also examines Japanese organisations operating in India, categorising them by location and industry, while identifying key avenues for collaboration.
Economic ties between India and Japan have surged, boosting bilateral trade to USD 22.85 billion in FY 2023-24 from USD 16.95 billion in FY 2019-20. Japan ranks as the fifth largest investor in India, with cumulative FDI amounting to USD 41.91 billion between April 2000 and March 2024. Here are several factors that make India a trusted economic partner for Japan:
Projected to become the world’s third-largest economy by 2030
Large domestic market driven by a young population and increasing middle-class incomes
Positioned within the Indian Ocean Rim economic zone, which includes fast-growing regions like the Middle East, Africa, and the West Coast of Southeast Asia
Ease of doing business ranking by the World Bank improved significantly from 142nd in 2014 to 63rd in 2020
Abundance of highly educated, young professionals from reputed universities
Hosts globally competitive industries like IT, food processing, automotive, and textiles
Highest fintech adoption rate and advanced retail payment systems such as Unified Payments Interface (UPI)
Investment opportunities aligned with environmental, social, and governance (ESG) principles
Key initiatives include Vision India @ 2047, Make in India, Production Linked Incentive schemes, Electronics Manufacturing Cluster 2.0, and the Semicon India Program
E-commerce market projected to reach USD 325 billion by 2030
Over 1,400 Japanese firms currently operate in India. Approximately 90% of them are in Haryana, Delhi, Maharashtra, Karnataka, and Tamil Nadu. Other states hosting Japanese enterprises include Gujarat, Rajasthan, and Telangana.
Consumer, retail, and e-commerce sectors, along with industrial products, together account for over half (52%) of Japanese companies in India. Other prominent sectors include auto and auto components at 14%, technology at 12%, and energy and natural resources making up the remainder.
Both countries have a common vision of equitable growth built on the foundation of peace and shared prosperity. India, currently ranked as the world’s fifth largest economy with a GDP of USD 3.5 trillion, is projected to become the third largest economy, reaching USD 7.3 trillion by 2030. This significant growth presents a considerable opportunity for Japanese companies to participate actively in India’s economic expansion. Japan’s ambitious target of 5 trillion yen (USD 42 billion) in India is already catalysing substantial private and public investments.
The Indian government has implemented numerous reforms to improve ease of doing business and attract FDI. The future of the India-Japan relationship is promising, driven by mutual interests in economic growth, technological advancement, and sustainable development.
Japan is contributing both funds and technology to major projects like the Mumbai-Ahmedabad Bullet Train and the Delhi-Mumbai Industrial Corridor (DMIC), aimed at enhancing industrial growth and urban development.
Initiatives such as the Japan-India Digital Partnership and the Japan India Startup Hub foster collaboration between startups and facilitate connections with Japanese venture capitalists, thereby playing a pivotal role accelerating in India’s digital economy.
Joint R&D initiatives focus on automotive technology, renewable energy, and healthcare.
Japan’s commitment of USD 10 billion through its AETI program supports renewable energy projects in India, with further investments expected in waste management and water conservation technologies.
India and Japan are already working to broaden their defence cooperation into emerging domains such as space and cyber, aiming to strengthen their overall strategic engagement.
Both countries agreed to bolster bilateral health cooperation following discussions at the 77th World Health Assembly in Geneva. They aim to expand collaborative efforts beyond the 2018 Memorandum of Cooperation, emphasising new domains like digital health and artificial intelligence.
Educational and cultural exchanges are flourishing, benefiting over 50,000 Indian professionals and fostering educational programs for more than 10,000 Japanese students and professionals in areas like robotics and advanced manufacturing.
