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Unlocking sectoral potential in the India-Japan partnership
India and Japan have evolved their relationship into a strong, strategic partnership focused on shared growth and prosperity. This alliance is built on a foundation of economic collaboration, cultural resonance, spiritual connection, and centuries-old civilisational ties. Together, the two nations have made significant strides in navigating the challenges of globalisation and technological change, further deepening their mutual 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.
India and Japan have built a robust economic partnership, significantly strengthened since the 2011 Comprehensive Economic Partnership Agreement. This pact has facilitated trade and investment liberalisation, fostering collaboration across key sectors like infrastructure, energy, innovation, and digital technology. Bilateral trade rose from USD 16.9 billion in FY20 to USD 22.9 billion in FY24, with India exporting USD 5.2 billion and importing USD 17.7 billion from Japan.
India and Japan are expanding collaboration in critical and emerging sectors. Key areas of cooperation include:
Over 1374 Japanese firms currently operate in India. Approximately 87% of them are in Delhi/NCR, Maharashtra, and Karnataka. Other states hosting Japanese enterprises include Tamil Nadu, Gujarat, Rajasthan, and Telangana.
Consumer, retail, and e-commerce sectors, along with industrial products, together account for approximately half of Japanese companies in India. Other prominent sectors include auto and auto components at 14%, technology at 10%, and energy and renewables, financial sector, pharmaceuticals, media and others 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 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’s 2025 Policy Program aims to secure USD 233.9 billion in overseas infrastructure orders, with India as a key partner in clean energy, digital innovation, and sustainable development.
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.
The bilateral partnership is evolving beyond trade into strategic collaboration in research and development, technology transfer, and innovation. Joint efforts are underway in areas such as precision medicine, cell and gene therapy, biologics, and digital health.
Japanese firms have established a strong presence in key automotive clusters such as Haryana, Gujarat, and Tamil Nadu, using India as a base to export to emerging markets, including Africa.
The recent Japan–India Finance Dialogue highlighted the importance of bilateral cooperation in areas such as financial digitalisation, regulatory frameworks, and supervisory mechanisms. Japanese investments in India are increasingly expanding into the financial services sector, with rising interest in fintech, insurance, and digital banking.
Educational and cultural exchanges are flourishing, benefiting over 50,000 Indian professionals and fostering educational programmes for more than 10,000 Japanese students and professionals in areas like robotics and advanced manufacturing.
Traditionally focused on operational support, Japanese GCCs in India are now exploring Research & Development (R&D) and digital transformation opportunities. For Japan, establishing GCCs in India offers strategic, financial, and operational advantages aligned with long-term business goals.
Unlocking sectoral potential in the India-Japan partnership