In a recent development, during the 18th Japan-India Foreign Ministers’ Strategic Dialogue held in New Delhi in January 2026, a new initiative for bilateral cooperation in Artificial Intelligence (AI) was announced. This is a significant development and symbolizes the maturity of the special strategic and global partnership between the two countries. External Affairs Minister S Jaishankar and his Japanese counterpart, Toshimitsu Motegi launched a new AI dialogue to promote strategic cooperation in AI through joint research, initiatives between universities and companies, development of large language models (LLM) and collaboration to promote a trustworthy AI ecosystem.
Japan-India AI Strategic Dialogue has been established under the Japan-India AI Cooperation Initiative (JAI). Additionally, Motegi said Japan will invite 500 highly skilled AI professionals from India by 2030 to boost joint research and development. The recently concluded AI Impact Summit, hosted by India, is a testament to the critical importance of emerging technologies in an increasingly volatile geopolitical environment. This article examines the trajectory and potential of this partnership in the AI ​​field.
India’s AI ecosystem is growing rapidly, driven by both a strong government effort for digital innovation and an expanding talent pool. It is witnessing transformative developments, positioning the country as a significant player in the global AI race. NASSCOM report states that the AI ​​market in India is projected to reach $17 billion by 2027, growing at a CAGR of over 25%. India’s strength lies in its impressive community of software developers, which is at the core of India’s AI revolution. More than 420,000 professionals are employed in AI-related roles, making India one of the fastest growing AI/ML developer communities in the world. An estimated 79% of Indian businesses plan to increase their AI investments within the next two years, and nearly 70% of Indian startups are integrating AI solutions into their products and services. By the end of 2025, AI is estimated to contribute around $500 billion to India’s GDP.
India’s AI ecosystem is a key element that differentiates it from other emerging economies. It is being shaped by grassroots innovation and business adaptability. This reflects the bottom-up momentum that has led to widespread adoption of AI among Indian startups and enterprises. AI has moved beyond niche applications to become integrated into mainstream economic and development activities. The early effects of AI-driven transformation are visible in sectors such as agriculture, healthcare, finance and governance. This will be further enhanced by a dynamic, increasingly tech-oriented startup ecosystem, rapid digitalization and strong institutional support. As a result, this will increase service delivery and efficiency, ultimately creating social impacts such as agricultural productivity, health care access and financial inclusion. India is incorporating AI into its development priorities, blending demographic advantage, economic need and digital efficiency.
The Indo-Pacific region has become an important region in the current volatile geopolitical environment. The escalating tariff war has worsened the situation, reinforcing the need for alternatives to traditional partnerships. In this context, partnerships with technologically advanced and like-minded countries like Japan are both natural and necessary. The avenues of cooperation are expanding beyond traditional approaches. India’s growing digital economy and Japan’s long-term interest in Indo-Pacific cooperation provide fertile ground for expanded bilateral AI cooperation.
Japan is proving to be a valuable partner for India’s AI ambitions. It has pledged $68 billion in private sector investment in India over the next decade, focusing on infrastructure, digital and technology sectors. It provides leadership in semiconductor fabrication, robotics and computing infrastructure. Furthermore, it has better hardware, data centers, and high-performance computing.
Recognizing the transformative potential of AI across all sectors, the Government of India has taken proactive steps to establish the country as a global hub for responsible and inclusive AI. This includes policy initiatives like Bharat AI Mission and National Strategy for Artificial Intelligence by NITI Aayog, as well as public investment in AI research centres. JICA has played a key role in this framework by contributing to the design and development of AI-ready data platforms under these strategies. It supported the development of the AI ​​Repository, an integrated platform that provides centralized access to thousands of high-quality datasets, AI models, and computing resources. It also promotes the development of AI infrastructure, including digital public infrastructure, data centers and AI-ready datasets, while ensuring AI security and governance. The Japanese infrastructure meets India’s computing deficit by connecting governments, academia and industry in partner countries through coordination with multiple donors and partner organizations, including utilizing Japan’s domestic expertise and stakeholder networks.
As a result, the Indian government has actively pursued global partnerships to drive innovation and build resilient AI infrastructure. There are joint ventures under JISSI (Japan-India Startup Investment/Skills Initiative) that promote ethical AI startups while strengthening sovereignty amid technological competition. Additionally, India and Japan renewed the MoC on Digital Partnership 2.0 in 2025 to promote cooperation in the digital sector including AI, digital public infrastructure, semiconductor, R&D and start-ups.
The recent significant collaboration is the tripartite agreement signed by the Government of Telangana, NTT DATA (Japan) and NEISSA (Tokyo) in April 2025. It aims to set up an AI data center cluster in Hyderabad, Telangana. The project involves an investment of ₹₹10,500 crore ($1.25 billion). The facility will have a total capacity of data center infrastructure of 400 MW and will host up to 25,000 GPUs, making it India’s largest AI compute facility.
There are synergies in the India-Japan AI ecosystem that need to be exploited. This will require leveraging complementary assets. While Japan faces a projected shortfall of over 500,000 digital workers by 2030 due to demographic deficit, India’s vast engineering talent and diverse datasets present a bright opportunity. Japan’s 500-expert invitation program enables streamlining human resources through practical training, accelerating applications in healthcare (remote diagnostics for rural areas) and eldercare robotics, R&D from Indian Global Competence Centers, refining big language models for supply chain optimization, cyber security, agriculture (predictable cropping through robotics) and smart cities – fueling the ambition of a $500 billion digital economy. By pooling their expertise, India and Japan are actively setting global trends.
However, further collaboration may be emphasized to increase the application of AI in the health care sector. This could be based on the NITI Aayog’s identification of health care as a priority sector and Japanese expertise in this area and supporting AI infrastructure, where Japan has demonstrated global leadership in GPU technologies, high-performance computing and advanced electronics. Joint product development, consultancy and research exchanges are important pillars of the partnership between Indian incubators and Japanese companies. India’s AI software capabilities, which enable end-to-end innovation, are complemented by Japan’s advanced hardware ecosystem, including robotics, sensors and embedded systems. Japanese companies are already entering India’s hardware and infrastructure sector, not just as suppliers but as co-manufacturers.
Japan and India are set to accelerate progress in AI automation and next-generation digital ecosystems. The deal essentially promotes an AI innovation bridge, connecting Japan’s global tech giants with India’s emerging startups. It is being transformed into a launchpad for funding, joint research and market expansion. The Japan-India Joint Vision for the Next Decade, unveiled during Prime Minister Narendra Modi’s August 2025 visit to Japan, reaffirms this commitment. The development also coincides with the 10th anniversary of Japan’s Free and Open Indo-Pacific (FOIP) strategy, which positions India as its indispensable ally. Both countries are signaling that their alliance is built to withstand global unrest. The agreement goes beyond economic security and lays the groundwork for the 75th anniversary of diplomatic relations in 2027. AI serves as a public good such as healthcare, smart cities, agriculture and education, and hence, partnerships should move beyond isolated projects and private incentives to public sector involvement and institutionalize collaboration while ensuring alignment with national priorities. India and Japan are committed to leading the technological revolution in the coming decades, where technological leadership will determine global power. As India continues to expand its computing capacity and AI ecosystem, collaboration with Japan will become essential.
(Views expressed are personal)
This article is written by Varun Shankar, India’s World Magazine Associate Fellow and Pacific Forum Non-Resident Fellow.
