From $34 billion to $68 billion: Japan's Confidence in India's Economic Potential

Despite the US imposing tariffs on India, Japan has increased its investment target from $34 billion to $68 billion, signaling strong confidence in India's economy. Prime Minister Modi's recent visit to Japan further solidifies this partnership.

Indiajapan RelationsEconomic InvestmentSmesSustainable DevelopmentTalent ExchangeReal EstateAug 31, 2025

From $34 billion to $68 billion: Japan's Confidence in India's Economic Potential

Real Estate:At a time when the US administration has come down hard on the Indian economy by imposing tariffs and President Donald Trump described it as a 'dead economy', Japan has increased its investment target from 5 trillion Yen (USD 34 billion) to 10 trillion Yen (USD 68 billion), in what is being seen as a vote of confidence for New Delhi. Prime Minister Narendra Modi, who was in Japan for two days, wrapped up his visit on Saturday with a ride on the bullet train with Japan Prime Minister Shigeru Ishiba.

Behind the headline number are Japan’s investments in India that have continued to accelerate, in a strong signal of confidence. The two sides had set a target of 5 trillion Yen for public and private investments and financing by 2026. That, sources said, had already been achieved in 2025, and the target was increased to 10 trillion Yen.

Over 170 MoUs signed in two years represent more than USD 13 billion in committed investments, said sources. According to sources, Nippon Steel has invested Rs 15 billion (USD 170 million) in Gujarat and Rs 56 billion (USD 635 million) on an integrated steel plant in Andhra Pradesh. Suzuki Motor has invested Rs 350 billion (USD 3.97 billion) for a new Gujarat plant; Rs 32 billion (USD 363 million) to expand production lines.

Toyota Kirloskar has invested Rs 33 billion (USD 374 million) for expansion in Karnataka and Rs 200 billion (USD 2.26 billion) for a new plant in Maharashtra; Sumitomo Realty has made USD 4.76 billion investments in real estate; JFE Steel has made Rs 445 billion (USD 5 billion) to strengthen electrical steel production, Osaka Gas has invested to produce 400 MW renewables, with future green hydrogen initiatives, and Astroscale had done first Japanese commercial satellite launches using ISRO’s PSLV.

This spread of investment across steel, automotive, renewables, semiconductors, real estate, and aerospace cements Japan’s confidence in India’s long-term economic potential, a source said. The second element in Japanese investments is providing benefits to Indian SMEs. Japanese industry partnerships are pulling Indian SMEs into global supply chains.

Tokyo Electron & Fujifilm with Tata Electronics is building a semiconductor ecosystem, with Indian SMEs becoming suppliers for high-value components. Toyota and Suzuki value chains will integrate hundreds of Tier-2/3 Indian SMEs. Fujitsu is recruiting 9,000 Indian engineers in its Global Capability Centre, boosting IT-linked SMEs.

SMEs will gain global-standard practices, technology infusion, and market access, elevating India’s export competitiveness, the source said. The third element is pertaining to the farmers and sustainable development. Japanese cooperation is directly empowering India’s rural economy through green energy projects.

Sojitz Corporation, in partnership with Indian Oil, is investing USD 395 million to establish 30 biogas plants that will produce 1.6 million tons annually. Farmers will supply crop residues and agri-waste, earning additional income while supporting India’s clean energy transition. Suzuki Motor Corporation, working with the National Dairy Development Board and local dairy cooperatives, is launching a biogas initiative adopted by UNIDO under its Industrial Cooperation Programme in the Global South (funded by Japan’s METI). Four biogas production plants in Banaskantha district in Gujarat, with a total investment of Rs 2.3 billion (26 million USD), will start operations in 2025. This project will convert cow dung into carbon-neutral biogas for CNG vehicles, which make up 20% of India’s passenger car market.

This will cut emissions, strengthen energy self-sufficiency, create rural jobs and raise farmer incomes, while embedding Japanese technology into scalable clean-energy infrastructure. The fourth element is about exports and manufacturing with Japanese joint ventures and know-how. Japanese JVs in India will unlock export growth, and cited a few examples:

Nippon Steel’s projects will boost specialty steel exports to auto and energy markets. Toyota and Suzuki have Hybrid/EV vehicles made in India, which are to be exported to Africa, Middle East, and South East Asia. Fujifilm and Tata are strengthening India’s position in global chip supply chains. Osaka Gas renewables is adding India to global clean energy value flows. This ensures “Make in India with Japan, export to the world.”

The fifth element is about human resources and knowledge exchange. This area is rapidly expanding under the India–Japan Talent Bridge programme and METI initiatives. The talent exchange target is 5 lakh Indians and Japanese exchanges in 5 years via study abroad, internships, and employment. There will be a sectoral focus on semiconductors, AI, IT, robotics, and clean energy. There will be career events at eight leading Indian universities (IIT Guwahati, IIT Kharagpur, IIT Kanpur, IIT Gandhinagar, BITS Pilani, University of Delhi, IISc Bangalore, and Anna University).

There will also be internships in India, Japan, and online, lowering barriers for students. Japan tours will be organised where professors and students would be invited for company visits, university roundtables, and networking with Japanese firms. Professional career events (TechSparks, NASSCOM, online job fairs) will also be organised for mid-career Indian professionals. There will be Talent Market Reports to help Japanese firms better understand Indian labor dynamics.

Nidec: Building a global software development centre in Bengaluru; hiring Indian engineers for motors, appliances, and EVs. Musashi Seimitsu: Developing e-Axles for two-wheeler EVs with India–Africa focus, hiring Indian graduates for R&D. Dai-ichi Life Techno Cross: Recruiting bilingual Indian IT engineers. MoneyForward India: Expanding financial tech platforms with Indian engineers. Beyond Next Ventures: Funding Indian deep-tech start-ups, offering research internships.

According to Japanese government’s initiatives, a budget of 15 billion Yen for skill and HR cooperation has been earmarked and that would be spent on five key programmes: Japanese company missions to India for partnerships, job fairs for Indian youth, subsidies for Japanese firms hosting Indian IT/technical interns, Japanese language training for Indians headed to Japan, and sending Japanese instructors to India for manufacturing skill transfer. This dual approach — academic and corporate — will solve Japan’s labour shortages while giving Indian youth global exposure and high-skill pathways.

A notable MoU was signed between the Government of Assam and M/s ASEAN Holdings, highlighting Japan’s commitment to India’s northeast. Its focus is investment in industrial infrastructure, logistics, and agro-based industries. This also dovetails with Japan’s long-standing interest in Act East Policy and development of India’s northeast, sources said.

The vision now extends beyond bilateral ties as at the Japan–India–Africa Forum and recently held 9th TICAD Summit in Tokyo, India emerged as an anchor country for connectivity and industrial corridors. Its priorities are mineral security (rare earths, lithium, cobalt), supply chain resilience in semiconductors and EVs, export markets in Africa and Middle East for Made-in-India goods with Japanese technology.

This ensures that “Make in India, Make for the World” is realised, with India-Japan partnership shaping not just economies but also regional security and resilience. From steel plants in Gujarat to biogas projects in rural India, from Assam’s gateway role to Tokyo’s advanced R&D labs, from farmers in rural India to AI engineers in Bangalore and Tokyo, from semiconductor fabs to academic exchanges, sources said the India–Japan pacts are building the bridge to a new era of cooperation. With “Make in India, Make for the World” as the guiding vision, this partnership is set to reshape industrial, agricultural, and human capital landscapes, not only for the two nations but for the whole region and the world at large.

Together, the two nations are investing not only in industries and supply chains, but in people, knowledge, and shared futures, the source said.

Frequently Asked Questions

What is the new investment target set by Japan for India?

Japan has increased its investment target from 5 trillion Yen (USD 34 billion) to 10 trillion Yen (USD 68 billion).

What sectors are Japanese investments focusing on in India?

Japanese investments are focusing on sectors such as steel, automotive, renewables, semiconductors, real estate, and aerospace.

How are Japanese investments benefiting Indian SMEs?

Japanese industry partnerships are pulling Indian SMEs into global supply chains, providing them with global-standard practices, technology infusion, and market access.

What are some examples of Japanese investments in green energy projects in India?

Sojitz Corporation is investing USD 395 million to establish 30 biogas plants, and Suzuki Motor Corporation is launching a biogas initiative in Gujarat to convert cow dung into carbon-neutral biogas.