Analysis by Zsolt Trembeczki
In March 2022, while celebrating the 70th anniversary of Indo-Japanese diplomatic relations, Japan’s Prime Minister announced his country’s plan to invest USD 42 billion in India over the next five years. This policy brief, the first in a two-part series dedicated to India–Japan investment relations, examines whether, if realised, this plan would be a true game changer in Indo–Japanese investment relations. It finds that, historically, Japanese investments in India have mostly followed the broader trends in India’s ability to attract FDI, as well as Japan’s global investment position, and while over the last eight years Indo–Japanese diplomatic relations have intensified remarkably, this has only translated to a mild relative (although significant absolute) increase in Japanese investors’ role in the Indian economy. Against this background, the realisation of PM Kishida’s March announcement would only require a moderate uptake in the trends of the past decade. Whether this happens, however, is more a function of India’s ability to implement further meaningful reforms than of the spirit of high-level bilateral relations.
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