PM Modi in Japan: Elevating Strategic and Economic Links

Prime Minister Narendra Modi was on a two-day visit to Japan from 29–30th August, participating in the 15th India-Japan Annual Summit. His first-ever meeting with Japanese Prime Minister Shigeru Ishiba marks a significant shift in India’s strategic diplomacy, reflecting a recalibration of India’s security, economic, and technological priorities in the Indo-Pacific, especially as global trade tensions and tariff shocks have jolted the international political economy.

This shifting regional realignment is also significant due to its strategic timing. New Delhi is strategically meeting Japan before the upcoming Shanghai Cooperation Organisation Summit in Tianjin, China, from August 31 to September 1. Prior to starting negotiations with China, Russia, and Central Asian nations under the SCO framework, India aims to strengthen its ties with its QUAD partner on technology, security, and economic resilience.

While easing ties with China, the prior visit to it's resilient partner and Beijing's South China Sea "anti" is also a signal that while we continue to move forward with trust and cooperation, we remain steadfast in our position on certain key issues like access to free and open oceans, respect to international laws and territorial sovereignty.

From Economic Trade to Economic Security: Post-2018 Indo-Japan Relations

Since 2018, India–Japan relations have evolved from primarily economic cooperation to a comprehensive partnership that integrates security, technology, and strategic industrial policy. The 2018 Tokyo Summit laid the foundation for deeper collaboration in infrastructure, connectivity, and innovation, which was further strengthened by the launch of the 2+2 Foreign and Defence Ministers’ Dialogue in 2019 and the signing of the Acquisition and Cross-Servicing Agreement (ACSA) in 2020, enabling reciprocal military logistics support. In 2022, Japan pledged ¥5 trillion in investments over five years, significantly boosting India’s manufacturing and technology sectors.

Since then, the partnership has expanded into semiconductor ecosystems, critical mineral supply chains, cybersecurity, and green technologies, making Japan a pivotal player in India’s economic security strategy. Today, the relationship stands as a “Special Strategic and Global Partnership,” reflecting a shared vision for a free, open, and resilient Indo-Pacific amid evolving regional and global challenges. On the sidelines, PM Modi also met his former counterpart, ex-PM Fumio Kishida, with whom he discussed the vast potential in emerging areas such as technology and semiconductors extensively. Having always been an advocate of strong India-Japan relations, Mr. Kishida emphasised the progress of critical technologies and human resource mobility as key sectors of new ties. These bilateral meetings signify the deep investments of stakeholders on both ends to renew and strengthen India-Japan relations in the present times.

These relations have only strengthened with time, especially in the aftermath of tariffs levied against India by Washington. The recent U.S. tariff hikes (50%) on several Indian exports have added urgency to India’s strategic recalibration, pushing New Delhi to diversify its economic partnerships and strengthen ties with Japan’s advanced manufacturing and financial ecosystems. Japan has become a key component of India's diversification strategy. Japanese financial institutions, including Japan International Cooperation Agency (JICA) and Japan Bank for International Cooperation (JBIC), are expected to expand concessional loans and co-investment models. As per a Japan Bank for International Cooperation (JBIC) Survey in 2024, India maintained its position as the top promising country over the medium term (next three years), with a vote share of 58.7%, up from 48.6% in 2023.

The “Special Strategic and Global Partnership”

India-Japan relations were elevated to ‘Global Partnership’ in 2000, ‘Strategic and Global Partnership’ in 2006, and ‘Special Strategic and Global Partnership’ in 2014. The two of the strongest Asian economies have traditionally had friendly ties, which for the longest time focused mainly on economic aspects. With shifting geopolitical scenarios and relations with the West, both states have reshaped their ties into a more integrated and strategic relationship. In his departure statement, PM Modi emphasised shaping the next phase of the “strategic and global partnership,” which has maintained a strong base for the past eleven years.

The strategic and global partnership is the highest category of partnership India has with any country. Sharing a common vision of a “Free, Open, and Resilient Indo-Pacific” amid growing Chinese influence and changing U.S. trade dynamics, New Delhi has witnessed growing proximity with the island nation. These changing dynamics rely heavily on shared values and mutual strategic interests.

From Indo-Pacific to South Asia

The South Asian region has increasingly become a strategic battleground for influence among India, China, Japan, and other Quad partners. To India, Japan presents itself as a counterweight in ensuring the region remains open and free from Chinese influence, especially in the aftermath of the Belt and Road Initiative. Additionally, Japanese economic aspirations are significant in India's regional security objectives.

The Japan-funded port project in Matarbari, Bangladesh (investment around $4.5 billion), provides India an alternative trade route bypassing Chinese-controlled facilities in Sri Lanka and Myanmar while integrating India’s Northeast Corridor, which also strengthens India-Bangladesh connectivity. Additionally, the joint venture of India and Japan in Colombo West Container Terminal counterbalances China’s influence in Hambantota port. The approximate $2.3 billion loan granted to Colombo, along with an additional $1.1 billion for ongoing projects, has aided the Sri Lankan economy while enabling Japanese presence in the region.

India and Japan are establishing economic corridors through these projects, which also serve as geopolitical buffers against China’s strong stance in the area. The mutual interests of the stakeholders in the region have benefitted both countries strategically. In addition to promoting regional economic integration and establishing new trade channels, these projects function as instruments of soft power and geopolitical leverage.

Industrial Growth and Strategic Diplomacy

Days before leaving for Japan, on 26th August, PM Modi inaugurated the localized production of hybrid battery electrodes and flagged off exports of Maruti Suzuki’s first global battery electric vehicle (BEV), the e-VITARA, to over 100 countries, including Japan and several European nations. This makes India a global EV manufacturing and export hub. The project embodies the India-Japan vision of “Make in India, Sell to the World” and marks Suzuki’s first global strategic battery-electric vehicle (BEV). The Indian Semiconductor Mission, with a ₹75,000 crore bid, has laid the foundation for such ambitious projects and future collaboration.

The flagship project was a key topic in the 2025 meeting, symbolizing co-production in the global market and reflecting PM Modi’s resolve in channeling industrial growth and economic initiatives towards strategic diplomacy.

Foreign Secretary Vikram Misri shared that India and Japan launched an Economic Security Initiative to strengthen supply chain resilience and collaboration in five key sectors: semiconductors, critical minerals, pharmaceuticals, IT, and clean energy. This initiative reflects a forward-looking alignment between New Delhi and Tokyo in response to converging challenges: China’s dominance over rare earths and global economic fragmentation due to U.S. tariffs.

From State to Region

During the 15th Annual Summit in Tokyo, both leaders launched the State-Prefecture Partnership Initiative, aiming to deepen ties vertically and horizontally. Having met the governors of 16 prefectures, PM Modi highlighted the potential of state-prefecture collaboration.

The discussions focused on strengthening subnational collaborations between Indian states and Japanese prefectures, fostering technology exchange, innovation-driven ecosystems, investment facilitation, skill development, start-up incubation, and support for small and medium-sized enterprises (SMEs), creating mutually beneficial economic and technological synergies that complement the broader India–Japan strategic framework.

The Shinkansen Diplomacy

Prime Minister Modi’s visit also strengthened collaborations in high-speed rail manufacturing. The partnership for manufacturing the next-generation E10 Shinkansen Bullet trains in India, originally billed at $17 billion, is a major venture for both states. India aims to provide an alternative to China’s manufacturing hegemony, boosting its economy. These trains will be part of the Mumbai–Ahmedabad High-Speed Rail Corridor, India’s first bullet train route.

Japan is India’s fifth-largest source of FDI, with a cumulative investment of $43.2 billion as of December 2024. The E10 Shinkansen agreement is a vital element of the growing India–Japan strategic alliance, which includes high-speed transportation, semiconductor advancements, defence collaboration, and Quad-led regional coordination. The agreement introduces modern bullet train technology to India and highlights a strategic shift towards local manufacturing, enhanced safety standards, and deeper economic and geopolitical cooperation between the two countries.

It is noteworthy that, following U.S. tariff escalation, the Modi administration swiftly strengthened Asian ties and promoted self-reliance rather than yielding to foreign pressures. The situation in the U.S. created an opportunity for India and other Asian nations to collaborate and advance as economic powerhouses in Asia.

Key Outcomes of the Summit

The 2025 meeting differed from its predecessors, taking place amid rising tariffs and shifts in India’s diplomatic strategies. With the SCO Summit around the corner, the visit strengthened India’s leverage, allowing New Delhi to negotiate from a position of confidence on connectivity, maritime security, and supply chain resilience.

Key outcomes anticipated by political analysts included:

• Revising the 2008 “Declaration on Security Cooperation” to enhance joint exercises, defence-technology exchanges, and maritime coordination with a strong Indo-Pacific focus.

• Aligning with Japan’s Economic Security Initiative, likely raising investments to approximately 10 trillion yen, emphasizing rare metals, battery technologies, and semiconductor manufacturing.

• Expediting collaboration in electric vehicle manufacturing and sustainable energy technology.

  
  

PM Modi emphasised collaboration with PM Shigeru Ishiba to enhance economic and investment relations and integrate Japanese technology with Indian talent. On the sidelines, leaders attended business events, resulting in the signing of 100 B2B agreements. The leaders revised the countries’ joint declaration on security cooperation for the first time in 17 years, marking a significant step in a turbulent world order. The revision, supported by cooperation on traditional and non-traditional threats, highlights the commitment of the world’s leading economies to protection and support.