India and Japan Eye Deeper Collaboration in Semiconductors, EVs, and Healthcare: Report

Economic ties between India and Japan are poised to deepen in the coming years, with mid-sized companies from both countries expected to drive the next wave of collaboration.

A new report by Federation of Indian Chambers of Commerce & Industry (FICCI) and Shardul Amarchand Mangaldas & Co suggests that partnerships between Japanese mid-sized enterprises—known as “Chuken”—and India’s fast-growing mid-sized manufacturers could reshape bilateral economic cooperation.

Titled India-Japan Economic Partnership: Partnering for a Secure, Innovative, and Sustainable Future, the report argues that these “Chuken-to-Chuken” collaborations could move the relationship beyond traditional supplier arrangements toward deeper technological exchange and co-creation.

According to the report, India’s mid-sized companies already play a crucial role as tier-1 and tier-2 suppliers for global manufacturers. Backed by strong engineering capabilities, international certifications, and expanding research and development capacity, they are well positioned to partner with Japanese firms looking to diversify supply chains across the Indo-Pacific.

Why Are Mid-Sized Firms Emerging as the New Engines of Cooperation?

The report emphasises that partnerships between Japanese “Chuken” companies and Indian mid-sized manufacturers could unlock new opportunities for technological collaboration and production integration.

These firms are often more agile than large corporations, enabling quicker adoption of new technologies and closer industrial collaboration. With global supply chains undergoing a major reset due to geopolitical tensions, climate risks, and economic security concerns, such partnerships could help both countries build more resilient manufacturing ecosystems.

“Japan is today India's 5th largest investor, with cumulative FDI reaching USD 45.69 billion and over 1500 Japanese companies operating in India,” the report noted.

Which Sectors Could Power the Next Phase of India–Japan Collaboration?

The report identifies several sectors where cooperation between the two countries could accelerate in the coming decade.

Semiconductors and electronics are among the most promising areas. India’s rapidly expanding electronics market, combined with strong government policy support, aligns with Japan’s strengths in upstream semiconductor technologies. This could lead to joint development of OSAT and ATMP facilities, power semiconductors, and deeper integration of electronics supply chains.

Automotive innovation is another major opportunity. India’s growing electric vehicle adoption and robust supplier ecosystem complement Japan’s expertise in advanced automotive technologies, EV components, and battery systems.

Healthcare and pharmaceuticals also offer strong synergies. India’s leadership in generic medicines and Japan’s innovation-driven pharmaceutical ecosystem could enable collaboration in APIs, vaccines, digital research and development, and regulated market manufacturing. At the same time, India’s expanding MedTech sector—supported by medical device parks and production-linked incentives—matches well with Japan’s advanced medical technology manufacturers.

Clean energy is expected to be another pillar of cooperation. Japan’s energy transition ambitions and India’s rapidly growing renewable capacity—currently at 262.7 GW—could open doors for collaboration in hydrogen, ammonia, and grid-scale energy storage.

Could Strategic Industries and Infrastructure Redefine the Partnership?

Beyond traditional sectors, the report highlights emerging areas of strategic collaboration including defence manufacturing, shipbuilding, and infrastructure development.

Recent reforms in Japan’s defence export policies, combined with India’s expanding industrial corridors, could create opportunities for joint production in electronics, sensors, maritime systems, and next-generation defence platforms.

Maritime cooperation is also gaining importance. India’s growing shipbuilding capacity and maritime infrastructure complement Japan’s advanced ship design and marine engineering expertise, paving the way for collaboration in commercial vessels, green shipping technologies, and resilient maritime supply chains.

Infrastructure modernisation is another promising area. Japan’s global expertise in railway signalling, safety systems, high-speed transport, and aviation maintenance could help accelerate India’s infrastructure expansion.

The report also highlights growing cooperation in the digital economy. India’s digital public infrastructure and Japan’s financial institutions are increasingly collaborating in areas such as digital lending, payments, artificial intelligence-driven services, and global capability centres.

A Strategic Partnership for the Next Decade

The report concludes that economic engagement between India and Japan has entered a decisive phase, backed by rising investments, strong trade flows, and closer policy alignment.

With India’s expanding consumer market, rapid infrastructure growth, and industrial reforms, and Japan’s leadership in advanced manufacturing, semiconductors, mobility systems, and specialty materials, the two countries are well positioned to build the next generation of global supply chains.

“India and Japan are uniquely placed to co-create resilient, innovation-led, and sustainable supply chains for the next generation of global industries.”

The report adds that new investment commitments, combined with shared values and strong institutional frameworks, could shape one of the most significant bilateral economic relationships of the coming decade.

(With inputs from ANI)