India–Japan relations: Lessons from the China–Japan paradox

• Trade as the foundation of strategic partnership: Trade and trade-related economic relationship is among the most obvious and tangible framework of economic integration. India-Japan trade has been consistent in the range of approximately $20 to $25 billion on a yearly basis despite decades of effort to build a strategic partnership. In fact, India–Japan bilateral trade stood at approximately $22.9 billion in 2023–24 and increased to about $27.5 billion in 2025–26. Yet India accounts for only around 1.75% of Japan’s global trade and ranks merely 14th among Japan’s trading partners. While this is modest and indeed has the significant potential, the actual figures remain less impressive. On the other hand, China-Japan trade exceeds $300 billion annually and has consistently been substantial even during periods of political turbulence between the two countries.

The lessons we ought to learn are obvious. Economic interdependence between countries creates new and dynamic constituencies and stakeholders who will support the relationship regardless of political uncertainties and geopolitical fluctuations. India and Japan have built the more difficult aspect of political trust much faster than economic integration. This is partly explained by the size of the Chinese economy as opposed to the Indian one, but not fully. Existing potential must be exploited fully.

• Japanese investment and India’s development story: The flow of Japanese investment has been instrumental and has played a significant role in India’s development. The Japanese investment in India has crossed ₹2.7 lakh crore ($28.4 billion) and around 1,500 Japanese companies work and pursue their businesses in India today. The investments made by these companies have remarkably contributed to infrastructure development, manufacturing, the automobile sector, logistics and supply chain, and industrial development. The cumulative Japanese FDI into India between 2000 and 2024 exceeded $43 billion, making Japan one of India’s most significant foreign investors. Japanese FDI into India alone amounted to nearly $2.5 billion in 2024–25, demonstrating the continued confidence of Japanese businesses in India’s long-term growth prospects.

However, it needs to be noted that the Japanese investment in China over the last several decades has enabled the creation of one of the world’s most integrated manufacturing ecosystems. The corporations of Japan did not simply invest in China; they became part of China’s industrial and economic transformation. This difference between the two relations is not only and cannot be measured in quantitative terms but ought to be seen at a policy and structural level. China over the years has ensured that Japanese firms are deeply embedded into the production networks. India is still at an early stage in the process of doing so. At a time when Japan (like many other countries) is seeking to de-risk from China, India needs to step up to the plate as much as Japan to make things happen in this sphere.

• Businesses as the real architects of bilateral relations: Partnership between countries and societies becomes meaningful when thousands of organisations become active stakeholders. The Japanese firms in China number in the tens of thousands and operate across every major economic, governance, industrial, and technology sector. The Japanese organisations have established production sites, logistics and supply chain systems, high-end facilities of research and development, deep and pervasive supplier networks, and active distribution channels. While approximately 1,500 Japanese companies currently operate in India, maintaining more than 5,500 business establishments across the country, the scale of Japanese corporate presence in China is significantly larger. The number of Japanese firms operating in China has long been estimated in the tens of thousands, creating one of the most extensive manufacturing, logistics, supplier, and research ecosystems in Asia.

The India story is very different. While India has made significant progress, the scale, the scope, the impact, the size, and the vision is much smaller. This particular aspect has demonstrated a very critical reality. Governments, despite their best intentions, can at best initiate partnerships. That is exactly what happened between India and Japan. However, it is the businesses, organisations, companies, corporations, and other entities that can sustain, expand, and deepen the relationship that will lead to measurable outcomes.

• Student mobility: Investing in the next generation of people: It needs to be mentioned that there is no indicator which predicts in a better and more futuristic manner the relationship of both the countries than student exchanges. Despite efforts on this front, the number of Indian students in Japan remains relatively small and is estimated to be around 1,600 in recent years, although this number has increased over the years.

On the other hand, Chinese students in Japan numbered approximately 123,485 in 2024, making them the largest international student community in Japan and outnumbering Indian students by more than 50 times. The implications of this alone are not only profound but substantive. Every student who studies today ends up becoming a future bridge and a connecting link between two societies. Every graduate and alumnus of a university in a country does develop various forms of professional and institutional networks, language-related competencies, cultural and societal understanding, and indeed longitudinal appreciation with the host country, built on friendships, partnerships, relationships, and lived memories.

• Tourism as a strategic instrument of diplomacy: It is rather unfortunate that we have underestimated tourism as a strategic instrument of building the India-Japan relations. Indian tourism to Japan has demonstrated impressive growth in recent years. In fact, a record 2,33,000 Indian tourists visited Japan in 2024 and spent approximately 56.1 billion yen during their visits, reflecting the growing appeal of Japan among Indian travellers.

However, Chinese tourism to Japan has for many decades worked at an entirely different scale, often measured in the form of millions of Chinese visiting Japan annually and historically representing one of the largest sources of inbound tourism into Japan. China and Japan have long invested in connectivity, promotion, outreach, marketing, language and linguistic support, and tourism infrastructure. Better late than never, India and Japan have only begun to undertake this effort.

• Connectivity as the framework of partnership: The travel between countries today is hugely shaped by different forms of connectivity and in this case air connectivity becomes the most important part of the relationship. It is the physical infrastructure of the relationship that will underpin the ability of air connectivity to become an important indicator.

China and Japan today are connected through approximately 61 direct air routes, linking 24 Chinese cities with 9 Japanese destinations, with more than 20 airlines operating direct services between the two countries. India and Japan, by contrast, remain connected through a relatively limited network concentrated around a handful of major cities. This relationship between both the countries simply cannot become significantly impactful if the access remains limited to a few cities. We need to make amends to the existing framework so that a wider connectivity is established between both the countries.

• Diasporas as bridges between nations: We have now known for long that diasporas build enduring relationships and linkages. The Indian community in Japan is growing rapidly and now has begun to play an important role in technology, education, innovation, entrepreneurship, research, and business. While the Indian community in Japan is estimated to be approximately 50,000 to 60,000 people, the Chinese community in Japan exceeded 873,000 residents by the end of 2024, making it the largest foreign community in the country.

In the same way, the Japanese community in India has also expanded significantly over the last two decades. However, it should be noted that the scale of this relationship is marginal compared to the China-Japan interactions. Large communities of people in host countries have the ability to build trust, create networks, expand and build new business opportunities, facilitate language capabilities, and also promote cultural familiarity. They end up becoming permanent stakeholders in economic relations.

• Universities as engines of long-term cooperation: The universities of a country have the unique advantage of building relationships for multiple generations. It is a fact that Chinese universities have developed extensive partnerships with Japanese universities and higher education institutions. The engagement is broad-based, having exchange programmes, joint degrees, research collaborations, faculty exchanges and language centres which have expanded across the country.

More than 900 universities in China offer Japanese language education programmes, and China today hosts one of the largest Japanese-language learning populations in the world.

• Language: The hidden infrastructure of international relations: One of the less understood and appreciated aspects of international relations is the hidden infrastructure of language. Historically, China invested systematically and comprehensively in Japanese language education. These efforts helped to create one of the world’s largest pools of Japanese-language learners and professionals capable of operating seamlessly across both societies. Japanese universities, in turn, developed deep expertise in China studies, resulting in the creation of a significantly able cohort of professionals who are empowered to work across both societies.

India has made some progress in promoting Japanese language training, particularly through technical institutes and skills programmes. These programmes have become more common in recent times; however, the impact and the size of these programmes remain much too small to have a significant bearing on the relationship.

• Innovation as the next frontier of India–Japan relations: It is a fact that the global economy will be driven by innovation and technology. Both China and Japan have been able to develop comprehensive networks to promote, joint research, scientific and journal publications, industrial innovation partnerships, technology-based collaborations and private equity investment leading to various technological advancements.

The scale of this collaboration is reflected in the fact that China spends more than 2.5% of its GDP on research and development, while Japan spends more than 3% of GDP. The combined annual R&D expenditure of both countries exceeds $700 billion, whereas India’s expenditure on research and development remains below 1% of GDP.

• Reform One: Establishment of an India–Japan knowledge corridor: India and Japan should establish a dynamic and indeed a compelling target of 50,000 Indian students in Japan and 10,000 Japanese students in India by 2035. This is a realistic aspiration yet requires significant work. This will need scholarships, credit transfer mechanisms, dual degree programmes, joint and micro campus initiatives, and language support programmes.The future of the relationship will be determined in classrooms as much as in diplomatic meetings.
• Reform Two: Build a mobility-based partnership: Japan faces significant demographic decline and also labour-based shortages. India, on the other hand, has a young workforce and growing technical and competent talent across different fields and sectors. A holistic mobility agreement covering students, researchers, nurses, engineers, technicians, and professionals could also help transform the relationship.
• Reform Three: Establishment of parliamentarians and legislators programme: India and Japan should work towards enabling both countries’ parliamentarians and members of the Legislative Assembly (in the Indian context) to be able to visit each other. Structured programmes through collaborative initiatives with universities need to be created so that Japanese parliamentarians and various prefecture-based officials and mayors are able to visit India through programmes that are going to be created by universities. Similar initiatives should be promoted for Indian parliamentarians and various legislative officials and ministers to be able to visit Japan and understand various aspects of economic, political, and social governance in Japan. I understand the India-Japan Friendship Group has been established by the Indian parliament. This must be reinvigorated.
• Reform Four: Establish a bilateral innovation and technology fund: The relationship between India and Japan must transcend infrastructure and manufacturing. A very important bilateral innovation fund that focuses on artificial intelligence, quantum technologies, biotechnology, clean energy, and advanced manufacturing could also create a new and significantly important pillar of cooperation. I believe that future partnerships between India and Japan will be driven by knowledge as much as infrastructure.
• Reform Five: Build a people-centred partnership: The most important reform that we need to lead in the India-Japan relations is societal. The relationship should not remain confined to governments and corporations and should transcend both these entities. It must inevitably involve students, teachers, artists, journalists, researchers, entrepreneurs, local governments, civil society organisations, and ordinary citizens. Only then will the partnership between India and Japan become truly resilient.

The most important paradoxical situation of Asian diplomacy is that India and Japan do have excellent politics but inadequate areas of collaboration, while China and Japan possess difficult and challenging politics but extraordinary and wide range of collaborative initiatives.