Japanese Prime Minister Sane Takaichi arrived in New Delhi today and his important meeting with Prime Minister Narendra Modi will add a new dimension to the economic relations between the two countries. The summit is not limited to strategic security or geopolitics but revolves around the growing flow of Japanese investment in India. Japan aims to make India a long-term economic partner in the coming days. Last year, the Japanese prime minister pledged to invest $61 billion in India over the next ten years, a decision that is expected to gain momentum at the current summit.
Currently, about 1,400 Japanese companies are operating in India and almost half of them are involved in the manufacturing sector. India’s large market, young workforce and growth potential make it an attractive hub for countries like Japan. With Japan’s shrinking population and limited economic expansion at home, they are turning to India in search of new opportunities. In contrast, due to rising labor costs and geographic uncertainty in China, many Japanese companies are now giving India more priority than China.
This economic cooperation is evidenced by the amount of investment by Japanese financial institutions. Institutions like SMBC, MUFG and Mizuho have invested thousands of crores in the Indian banking and financial sector. This investment has not only helped Japanese companies, but also played an important role in the Indian financial system. The summit is also expected to discuss a new mechanism for direct exchange of rupees and yen, which will reduce dependence on the dollar and facilitate business transactions between the two countries.
Another important aspect of the conference is cooperation in the field of green energy. A nearly $3 billion green ammonia project between Japan’s IHI Corporation and India’s Acme Group will bring the two countries together in the energy sector. The project will produce green hydrogen from solar energy produced in India and convert it into ammonia for export to Japan. Thus, this proximity between India and Japan in the infrastructure, technology, manufacturing and energy sectors could become a dominant force in the Asian economy in the coming days.