Japan has pledged a massive investment in India during PM Modi’s visit, but execution challenges still remain.
Two months after U.S. President Donald Trump dismissed India as a “dead economy,” Japan delivered a strikingly different assessment. During Prime Minister Narendra Modi’s visit to Tokyo on August 29 and 30, Japan announced $68 billion of private investments in India over the next decade, marking the biggest outcome of the bilateral summit.
Japanese confidence in India’s growth potential contrasted sharply with Washington’s skepticism. Still, experts caution that these are commitments by private companies rather than government guarantees. Japanese firms will weigh India’s ability to absorb technology, provide skilled manpower, and create the right ecosystem before turning pledges into projects.
Alongside the investment announcement, India and Japan unveiled a Joint Vision for the Next Decade. The plan identified priority areas ranging from economic security, sustainability, and technology to health, mobility, and people-to-people exchanges. The framework is both pragmatic and expansive, opening fresh avenues for collaboration.
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Expanding Partnership Beyond Delhi and Tokyo
Another important initiative launched during the visit was the State-Prefecture Partnership Initiative. This seeks to connect Indian states directly with Japanese prefectures, moving cooperation beyond the capitals. Such decentralized engagement, analysts believe, can embed projects more quickly at the local level.
India-Japan ties have historically avoided major irritants, except for Tokyo’s strong criticism of India’s 1998 nuclear tests. India has remained the largest recipient of Japanese development assistance, and cumulative Japanese FDI in India since 2000 now stands at $44.4 billion. Annual bilateral trade is valued at about $22.85 billion.
The relationship has steadily evolved, from a “Global Partnership” in 2000, to a “Strategic and Global Partnership” in 2006, and finally to a “Special Strategic and Global Partnership” in 2014. Both countries are also central players in the Quad grouping with the U.S. and Australia, while jointly campaigning for United Nations Security Council reforms.
This year’s summit with Prime Minister Ishiba Shigeru came at a sensitive time. Global economic uncertainty has been worsened by U.S. tariffs with 15 percent on Japanese goods, and a steep 50 percent on Indian exports. Both Tokyo and Delhi face questions about Washington’s reliability, prompting closer bilateral coordination.
Under the Economic Security Cooperation Initiative, India and Japan will deepen work in artificial intelligence, semiconductors, critical minerals, telecom, pharmaceuticals, and clean energy. According to an Indian foreign ministry official, these steps aim to enhance supply chain resilience and regional stability.
Security Cooperation Amid Regional Tensions
The two governments also launched a new AI Cooperation Initiative to facilitate industry-academic exchanges, joint research projects, and data center development in India. While framed as economic, the effort is closely tied to security, given the central role of technology in strategic competition.
Defense cooperation remains another pillar of the partnership. Although China was not named directly in the joint statement, references to “serious concern” in the East and South China Seas and opposition to “unilateral actions” clearly pointed at Beijing.
A revised Joint Declaration on Security Cooperation now includes space, cyber, and defense equipment development alongside more advanced bilateral exercises and joint work by special operations units. It updates the 2008 framework and institutionalizes dialogue between the national security advisors of both countries.
Both sides describe their partnership as mutually beneficial. Delhi views Japanese investments as essential for Narendra Modi’s “Make in India” push, while Tokyo sees India as a crucial market and strategic partner at a time of U.S. trade friction.
The complementarities are evident. India’s mineral reserves and Japan’s extraction expertise align well, as do Japan’s need for skilled labor and India’s surplus workforce. Tokyo plans to facilitate exchanges of 500,000 people, including 50,000 Indian workers, to address Japan’s demographic challenges. Indian students will also benefit through expanded educational exchanges, with Japanese corporations like Suzuki playing a leading role.
Progress, however, faces obstacles. While Japan has introduced its E10 Shinkansen for India’s bullet train project, the Mumbai-Ahmedabad line continues to be plagued by delays, cost overruns, and land acquisition hurdles.
Questions also persist about India’s readiness for high-end technology. In areas like semiconductors, India remains at the lower end of the value chain. Digitalization may be the only sector where India holds an edge over Japan.
Despite challenges in implementation, both sides insist the momentum is real. An Indian foreign ministry official highlighted that the original investment target of $34 billion for 2026 was achieved early, prompting the new $68 billion commitment. Whether execution can match ambition will determine the lasting impact of Modi’s Tokyo visit.