Outlook Explains | How India, Japan Plan to Build on Expanding Partnership

Japanese Prime Minister Sanae Takaichi arrives in New Delhi on 1 July for a three-day visit centred on the 16th India-Japan Annual Summit. She will hold talks with Prime Minister Narendra Modi as both sides review the full spectrum of bilateral cooperation and exchange views on regional and global developments.

The visit, Takaichi's first to India since taking office, follows the previous Annual Summit in Tokyo in 2025 and comes ahead of the 75th anniversary of diplomatic relations in 2027.

India and Japan elevated ties to a Special Strategic and Global Partnership in 2014. Since then, cooperation has expanded well beyond trade to include infrastructure, defence, technology, clean energy and people-to-people exchanges.

Economic Pillar

Trade and investment remain the backbone of the relationship.

Bilateral trade exceeded $27 billion in 2025-26, while the India-Japan Comprehensive Economic Partnership Agreement (CEPA), in force since 2011, continues to anchor economic engagement. Japan is also India's fifth-largest investor, with cumulative foreign direct investment of $48.17 billion between April 2000 and March 2026.

The trend is showed in JETRO's Global Trade and Investment Report 2025. Japan's outward foreign direct investment rose 6.5% year-on-year to $208.1 billion in 2024, while investment in India reached $5.3 billion, surpassing investment in China for the second consecutive year. Between January and May 2025, investment into India increased a further 20.6% compared with the same period a year earlier.

The report attributes the growth to Japanese companies diversifying overseas investments and strengthening supply chains, with India emerging as a preferred destination for manufacturing and long-term investment.

Infrastructure has reinforced those economic links. Through its Official Development Assistance programme, Japan has supported several flagship projects, including the Mumbai-Ahmedabad High-Speed Rail corridor, the Delhi-Mumbai Industrial Corridor and major urban transport initiatives.

Defence Ties

Defence cooperation has become another key pillar of the partnership.

India and Japan hold regular Foreign and Defence Ministerial 2+2 Dialogues, with the latest round taking place in Tokyo in November 2025. Military engagement has also expanded through bilateral and multilateral exercises, including the Malabar naval exercise alongside Australia and the United States.

Cooperation now spans maritime security, defence technology, military training and regular exchanges between the two countries' armed forces, reflecting closer coordination on regional security.

Technology and People

Technology is playing an increasingly important role in bilateral cooperation.

Both countries are working together on semiconductors, resilient supply chains, digital technologies and clean energy. Japan's Asia Zero Emission Community (AZEC), which includes India, has also created opportunities for collaboration on decarbonisation and energy transition.

Business and cultural links continue to strengthen the relationship. More than 1,400 Japanese companies operate in India across sectors ranging from automobiles and electronics to finance and manufacturing. At the same time, the Indian community in Japan has grown steadily, supported by increasing educational, professional and cultural exchanges.

Looking Ahead

The 16th India-Japan Annual Summit is expected to review progress across existing initiatives while identifying new areas of cooperation in trade, investment, infrastructure, defence and technology.

As India and Japan prepare to mark 75 years of diplomatic relations next year, the partnership continues to broaden in both scope and ambition. The summit offers an opportunity to build on decades of cooperation and set the direction for the next phase of one of Asia's closest bilateral relationships.