The India-Japan Annual Summit of 2 July 2026 marked the first visit of Japanese Prime Minister Sanae Takaichi to India. She established a warm rapport with Prime Minister Modi. This summit is an important evolution in perhaps the most important strategic partnership in the Indo-Pacific. Prior India-Japan summits have gradually enhanced collaboration in infrastructure, Overseas Development Assistance (ODA), investment, and security.
The 2026 summit has rejuvenated the relationship with a new base principle of cooperation — economic security. This refers to, and recognises the importance of, economic resilience, technological development, and stable supply chains as integral elements of national security. The pandemic, multiple geopolitical crises, the weaponisation of technology and supply chains, and increasing rivalry over semiconductors, AI, and critical minerals clearly manifest that strategic weaknesses are often rooted in the economic agenda. For India and Japan, growth requires open markets, secure sea lanes, and technological competitiveness, making it difficult to insulate economic policy from the larger strategic outlook of the two countries.
In terms of trade, India-Japan trade remains modest at $27.48 billion. Exports from Japan to India during this period were $21.43 billion, while imports were a third of that at $6.04 billion. Today, India ranks 14th in Japan’s total trade with a 1.75% share, while Japan ranks 10th in India’s total trade with a 2.26% share. This must be enhanced. The China-Japan bilateral trade is $300 billion annually, and even Indonesia’s is $28 billion. The historic India-Japan Comprehensive Economic Partnership Agreement (CEPA), implemented from August 2011, has accelerated economic and commercial relations but needs a review, which is now under consideration.
The July 2 India-Japan Summit provided this recognition through a robust set of agreements. Besides the Joint Statement, the Joint Declaration on Economic Security Cooperation,[1] a Fact Sheet on the same,[2] and Joint Statements on Artificial Intelligence and Energy Resilience were part of the bouquet that has put the India-Japan relationship on a path to deeper engagement. Collectively, the outcomes of the summit represent the first effort to create a bilateral framework that meshes economic and strategic resilience.
With this, the Special Strategic and Global Partnership has entered a new period in which trusted technologies, resilient manufacturing, and secure supply chains are its defining features. It will balance economic and security strategies by diversifying trusted partners and supply chains away from concentrated production zones.
Through its Economic Security Promotion Act of 2022[3], Japan initiated this process domestically. Its policies now consider economic security above market efficiency as part of their decision-making processes. This will entail securing supply chains from disruption due to geopolitical conflict by indigenising them or by relying on allies or partners rather than on China. Unlike Japan’s legislative approach, India has adopted a more sector-specific approach, though often with common objectives. India is working through the PLI schemes, the India Semiconductor Mission, Digital Public Infrastructure (DPI), the National Critical Mineral Mission, and a focus on stepping up manufacturing capabilities, which together constitute India’s response to building an economic security architecture. In some ways, the 2026 summit brings convergence between these approaches, as on AI, semiconductors, and energy security taking their impact beyond the bilateral relationship. It is a new strategic vocabulary that will determine future economic and technological cooperation.
For instance, logistics networks are seen as facilitators of resilient supply chains, digital infrastructure supports trusted technologies, and industrial corridors are intended to enhance manufacturing capabilities. The role of infrastructure as a facilitator of national resilience has therefore come to the fore.
Japanese FDI is accelerating the existing trend. Investment targets announced during earlier summits suggested that Japan would mobilise ¥5 trillion ($35 billion) in public and private investment by 2027. At the 2025 summit, this target was raised to ¥10 trillion ($70 billion) by 2035. These targets are now not linked only to the pace of ODA rather, Japanese companies have been encouraged by the Government of Japan to enhance their economic profile in India and develop new investment plans over a five-to-ten-year period.
Japanese FDI has expanded considerably over the past decade. New investments have come from companies that have done well in India, such as Toyota, Suzuki, Hitachi, Fujifilm, and YKK, and they are expanding into newer sectors that bring strategic heft to Japanese investment. Therefore, the India-Japan FDI partnership is now going beyond individual investment projects towards the shared logic of strategic ecosystems that can operate in integrated clusters to enhance productivity and reduce vulnerabilities.
Now, these Japanese companies that have succeeded in automobiles, transport infrastructure, and consumer manufacturing are now expanding into semiconductors, electronics, renewable energy, advanced materials, financial services, logistics, digital infrastructure, and their ancillary industries. While the earlier phase of investment was driven largely by India’s domestic consumption, the current effort is to integrate India into regional production networks that could become part of diversified, non-China supply chains across the Indo-Pacific.
This trend is already visible. Toyota announced a new manufacturing facility in Maharashtra in 2024. Suzuki Motor Corporation unveiled plans in 2025 to invest about $7.3 billion (₹70,000 crore) over the next five years. MUFG completed an investment of $4.3 billion (₹40,000 crore) in Shriram Finance in 2026. Hitachi Energy is investing $24 million (₹2,000 crore) in a new facility in Vadodara. YKK announced a $150 million expansion in Chennai, while Yokohama Rubber is establishing a $130 million plant in Odisha. Mitsui Fudosan has entered India’s growing data-centre sector, Fujifilm is investing in semiconductor chemicals linked to Tata’s semiconductor ecosystem in Gujarat, and Japanese publisher Kodansha has entered India through a new partnership.
In an effort to leverage the complementary capabilities of India and Japan, Japan, as a global leader in semiconductor materials, manufacturing, and precision engineering, is seeking to invest[4] in India, where fabrication, assembly, testing, and packaging under the India Semiconductor Mission[5] are being promoted. Cooperation extends well beyond FDI and includes research and development, the development of a skilled workforce, and dependable manufacturing systems that could become part of Indo-Pacific supply chains.
Similarly, AI manifests the centrality it has acquired in the technological landscape. The Joint Statement on AI[6] goes beyond research and development to embrace governance standards, applications, innovation, and the development of human capabilities. India possesses one of the world’s largest digital public infrastructure ecosystems and a growing skilled workforce. Japan’s advanced capabilities in robotics, precision engineering, and industrial automation can be combined with these Indian strengths to create stronger manufacturing, logistics, healthcare, and public administration through AI applications, while ensuring that governance standards remain consistent with the values shared by both democratic partners.
An important part of the strategic triangle is critical minerals. China’s dominance and weaponisation of mineral processing and exports have hurt both India and Japan. Japan has modern processing technologies, financing, and industrial strength, while India offers a growing overseas mineral partnership effort and plans for increasing downstream processing within India. This partnership will look at obtaining raw materials and building midstream and downstream value chains – which will also help supplier countries in Africa and elsewhere.
The Joint Statement on Energy Resilience[7] shows that the logic of cooperation for economic security is now taking the geopolitics of the West Asia crisis on board and trying to go beyond dependence on fossil fuels. Cooperative efforts on hydrogen, ammonia, LNG, biofuels, and clean energy technologies, including financial support for biogas and ammonia plants in India that could supply their production to Japanese entities overseas, provide a strong push towards energy resilience.
Like most things, the achievement of economic security from concept to reality will be judged by its implementation. The summit has provided strategic direction, but it is research and development, financing institutions, B2B connections, and collaboration and coordination among regulators that will actually create resilient supply chains. The challenge ahead is to create an integrated industrial system out of the shared strategic vision, in which India will become part of resilient regional supply chains that could give a serious fillip to its growth and export capabilities.
Despite the efforts of important Japanese companies that have done well in India, the next phase will require the participation of a much larger number of Japanese MSMEs, which form the backbone of manufacturing supply chains by producing specialised components and precision technologies that support larger industries. The movement of such MSMEs to India is vital to the next phase of the economic partnership.
However, many of Japan’s MSMEs remain anxious about entering India. Their concerns are well documented in JETRO’s surveys.[8] Regulatory complexity, differing procedures among Indian states, challenges relating to land acquisition and logistics, and uncertain approval timelines are issues that larger companies have largely overcome. Smaller companies, however, compare these conditions with what they receive in countries such as Vietnam and Thailand, and India fares poorly, causing concern.
These concerns are also augmented by issues relating to standards and certification. Japanese companies believe that compliance with the Bureau of Indian Standards (BIS) requirements is time-consuming and costly, even though their products may already be certified under Japanese or internationally accepted standards. They therefore prefer greater harmonisation between BIS and internationally recognised certification systems, particularly on technical issues of products of interest. [9] Mutual recognition of technical standards, where possible, would reduce costs and approval times and make India a more attractive destination for technology-led FDI.
Addressing such concerns is now understood to be part of the economic security partnership. Accordingly, the Indian side announced a Japan Business Week, under the PMO, during which such issues would be taken up for resolution. This will augment the special facilitation mechanism that already exists to address Japanese investors’ concerns.
The Modi-Takaichi Summit also elevated bilateral cooperation by placing it within larger frameworks, including the G7, the G20, the Quad, and ASEAN. The Joint Statement recognises India’s expanding engagement with ASEAN, South Asia, and Africa and links it with Japan’s revised Free and Open Indo-Pacific (FOIP) strategy. Clearly, economic resilience cannot be pursued bilaterally alone.
ASEAN, therefore, assumes greater significance, and Japan and India must be on the same page economically and strategically. The strategic side is stronger, and India and Japan have reaffirmed their support for ASEAN Centrality and the ASEAN Outlook on the Indo-Pacific (AOIP) as part of the effort to maintain an inclusive and rules-based regional order. The decision made during the summit to establish a trilateral India-Japan-Philippines Track 1.5 Dialogue is welcome. It demonstrates that India and Japan are pursuing the idea of engaging ASEAN member states voluntarily in ASEAN-plus initiatives. The Philippines has now become a strategic partner of both India and Japan, with a special focus on maritime security, infrastructure development, and supply-chain resilience. How this evolves could well become the basis for similar engagement with Vietnam or Indonesia.
Africa is another important dimension. Japan’s enhanced FOIP and India’s India-Africa Forum Summit (IAFS) process share common objectives in promoting infrastructure, digital connectivity, healthcare, clean energy, and critical minerals in Africa. Jointly developed projects in third countries in Africa could become important instruments for supporting sustainable development while also helping to diversify supply chains, particularly for critical minerals.
In view of the uncertainty surrounding the Quad, particularly with U.S. engagement in the Indo-Pacific, India and Japan have reiterated its importance. The Joint Statement expands the Quad’s agenda beyond maritime security to include critical technologies, resilient supply chains, climate change, public health, and infrastructure development. The economic security framework provides a practical basis for implementing Quad initiatives.[10] By working more closely together, India and Japan, along with Australia and willing ASEAN partners, can provide greater stability across the region.
The Modi-Takaichi Summit is more than merely another diplomatic event. It clearly demonstrated the desire to establish economic security as the defining principle of the India-Japan Special Strategic and Global Partnership. This partnership has evolved through several phases. Initially, it was led by ODA and infrastructure development. Subsequently, FDI, industrial corridors, and manufacturing cooperation came to the fore. With this summit, the next phase—centred on resilient supply chains, trusted technologies, AI, critical minerals, and energy resilience—has emerged.
India and Japan have articulated a clear vision, and the India-Japan Economic Summit demonstrated significant opportunities through the 129 MoUs that were concluded. What lies ahead is the need for sustained implementation through a faster pace of regulatory reform, stronger institutional coordination, and greater facilitation of innovation and investment.
Such achievements will enable the legacy of the Modi-Takaichi Summit to extend well beyond the bilateral relationship. They will demonstrate that middle powers, through responsible and sustained action, are capable of shaping the future of the Indo-Pacific through strategic intent and the resilient economic networks that back it up to promote regional stability. Economic security is therefore no longer simply another area of cooperation between India and Japan. It has become the foundation upon which the next generation of the India-Japan Special Strategic and Global Partnership will be built.
Gurjit Singh is a former Indian Ambassador to Germany and author of The Durian Flavour: India, ASEAN and the Act East Policy. He is currently promoting the impact investment movement for implementing SDGs in Africa.
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References:
[1] Ministry of External Affairs, Government of India, India–Japan Joint Declaration on Economic Security Cooperation, Ministry of External Affairs, July 2, 2026. https://www.mea.gov.in/bilateral-documents?dtl/41395/IndiaJapan_Joint_Declaration_on_Economic_Security_Cooperation
[2] Ministry of External Affairs, Government of India, “Fact Sheet 2.0: India–Japan Economic Security Cooperation,” Ministry of External Affairs, July 2, 2026. https://www.mea.gov.in/bilateral-documents?dtl/41396/Fact_Sheet_20_IndiaJapan_Economic_Security_Cooperation
[3] Ministry of Justice, Japan, Act on the Promotion of Ensuring National Security Through Integrated Implementation of Economic Measures. https://www.japaneselawtranslation.go.jp/en/laws/view/4716/en
[4] The agreements reached at the summit identify semiconductors, AI, critical minerals, and energy resilience as priority areas because they influence both national security and economic competitiveness. Semiconductors perhaps illustrate this best. Modern production lines depend upon supply chains that are, however, geographically concentrated. The chips produced are vital for a variety of sectors, from consumer electronics to telecommunications, defence, automobiles, industrial automation, and AI. Disruptions in their supply therefore have far-reaching commercial consequences.
[5] Indian Strategic Minerals Foundation (ISM), “Home,” n.d. (accessed July 9, 2026). https://ism.gov.in/
[6] Ministry of Foreign Affairs of Japan, Japan–India Vision 2025: Special Strategic and Global Partnership Working Together for Peace and Prosperity of the Indo-Pacific Region and the World, December 12, 2015. https://www.mofa.go.jp/mofaj/files/101054202.pdf
[7] Ministry of External Affairs, Government of India. “Joint Statement between Ministry of Petroleum and Natural Gas of the Republic of India and the Ministry of Economy, Trade and Industry of Japan on Energy Resilience.” February 19, 2025. https://www.mea.gov.in/bilateral-documents?dtl/41389/Joint_Statement_between_Ministry_of_Petroleum_and_Natural_Gas_of_the_Republic_of_India_and_the_Ministry_of_Economy_Trade_and_Industry_of_Japan_on_Energy_Resilience
[8] Japan External Trade Organization (JETRO). “India–Japan Industry Co-Creation, Co-Innovation Initiative Launched to Strengthen Bilateral Business Cooperation.” February 19, 2025. https://www.jetro.go.jp/en/news/releases/2025/04461099867183d4.html
[9] Bureau of Indian Standards published 21,890 standards for products, process specifications, service sectors, codes of practice and methods of test terminology, PIB, 23 December 2022. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1886025®=48&lang=2
[10] Ministry of External Affairs, Government of India. “16th India–Japan Annual Summit Joint Statement.” February 19, 2025. https://www.mea.gov.in/bilateral-documents?dtl/41391/16th_IndiaJapan_Annual_Summit_Joint_Statement