Prime Minister Narendra Modi meets Japanese Prime Minister Sanae Takaichi in New Delhi to discuss and expand bilateral investment and economic ties.
NEW DELHI: Japanese Prime Minister Sanae Takaichi concluded her first official visit to India on Thursday after co-chairing the 16th India-Japan Annual Summit with Prime Minister Narendra Modi, a three-day engagement that produced sixteen outcome documents spanning semiconductors, critical minerals, artificial intelligence and defence technology. The summit also reviewed progress on the ten-year, JPY 10 trillion private investment target that both governments set during Modi’s Tokyo visit in August 2025, alongside fresh corporate commitments announced at the India-Japan Business Forum.
Strategic Trust And The Commercial Lag
The geopolitical alignment between the two countries has rarely looked stronger. Even so, the numbers tell a more complicated story once the diplomatic language is set aside. Bilateral trade touched 6 billion for over a decade, while Japanese exports to India have climbed past 15.39 billion. That asymmetry traces back to the 2011 Comprehensive Economic Partnership Agreement, since Japan’s tariffs were already near zero when the pact took effect, whereas India’s tariff cuts handed Japanese exporters an immediate edge. Both sides have now agreed to expedite a review of that agreement, though Japanese negotiators are expected to guard their farm and chemical sectors closely.
The $68 Billion Target
Consequently, the investment story deserves closer scrutiny than the headline figure suggests. The JPY 10 trillion pledge translated to roughly $68 billion at the time it was announced but yen depreciation against the dollar has since trimmed its real value by close to 9%. More strikingly, actual Japanese FDI into India totalled just $3.2 billion between April and December 2025, a run-rate that lags the required annual pace by somewhere between 31% and 37% depending on which exchange rate baseline is used. PM Modi noted during the joint briefing that nearly 120 business agreements had been reached over the past year, pointing to more than $10 billion in prospective investment, a figure that sits close to, the $12.5 billion in fresh CEO commitments reported around the summit. Either way the pattern is clear: capital is concentrated in a handful of large corporate names such as MUFG’s equity injection into Shriram Finance and IHI’s backing for ACME’s green ammonia plant in Odisha, leaving mid-sized manufacturing largely untouched.
Winning the Rhetoric
This is where the China+1 narrative gets complicated. Japanese firms in India report the highest expansion appetite in Asia, with 81.5% planning to grow their local operations and three-quarters of them are already profitable. Yet exports make up just 14.1% of their India revenue, the lowest ratio among comparable manufacturing hubs. Vietnam and Thailand continue to draw larger investment stocks and higher trade volumes, largely because both are woven into tariff-free regional trade architecture that India has not joined. In other words, Japanese companies increasingly like selling to India. Fewer of them are choosing to build in India for the world.
Where the Substance Actually Sits
That said, some outcomes carry real weight. Renesas Electronics has already begun commercial chip shipments from its Sanand facility and Tokyo Electron is setting up support infrastructure for Tata’s Dholera fab, both signs that semiconductor cooperation has moved past paperwork. The agreement to advance the UNICORN stealth mast project marks the first genuine defence technology transfer between the two nations, made possible after Takaichi eased Japan’s long-standing restrictions on defence exports. On the financial side, officials are targeting a rupee-yen local currency settlement mechanism within this fiscal year, a move that would let businesses bypass the dollar entirely for routine trade.
What Comes Next
None of this erases the underlying tension between ambition and delivery. The Mumbai-Ahmedabad bullet train, still the most visible symbol of the partnership, is not expected to open even its first priority section before August 2027. PM Modi has accepted an invitation to visit Japan next year for the 17th summit. The strategic trust between New Delhi and Tokyo is not in question. What remains to be seen is whether the next twelve months turn pledges into ground-level factories or whether the deployment gap simply widens further.
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