Sanae Takaichi’s Leadership and the Future of India–Japan Strategic Partnership

Japan’s political landscape has entered a historic phase with the rise of its first female Prime Minister, but continuity rather than disruption may define the country’s foreign policy. Unlikely to tamper with Shinzo Abe’s pro-India foreign policy, the new leadership is expected to deepen strategic cooperation with India while reinforcing Japan’s China+1 strategy to diversify supply chains and investments. As geopolitical tensions reshape global economic alliances, the evolving India–Japan partnership could emerge as a central pillar of stability and growth in the Indo-Pacific.

By.  S. Majumder,

Induction of first female Prime Minister of Japan is an epoch making change in the male dominating society. None the less, even though India-Japan relation has never witnessed political upheaval, unlike USA, China , Pakistan , change in the  guard warrant  hope  for the stint of first female Prime Minister of Japan and its accession to Shinzo Abe’s pro-India policy.   

Factors attributing to her longer stint for leadership are alignment  with conservatives, traditional social values, opposing different surnames for married couples.

She never visited India. Notwithstanding, she is well-versed to keep close contact with India through diplomatic channel to increase self reliance and economic revival through bilateral relations.

During long periods of late Prime Minister Shinzo Abe’s regime ( 2012-2020), Prime Minister Sanae Takaichi played critical role in development of relation with India in digital economy, smart city projects and cyber security.  Given Indo-Pacific region emerging third force , her critical role in giving new shape to Japan-India relation to develop alternative supply chain is laudable.

A new  scope has emerged for improvement in Japan and India   bilateral relation, after Japan underwent a major hardship with USA’s  high tariff regime and mounting pressure for big  Japanese investment in USA , along with  sharing defence burden.

Prime Minister Sanae Takaichi’s  primary focus on anti-China move , which stems from Shinzo Abe’s  strategic shift in Japanese investment to India and other Asian countries from China, is a case in point for a new shape in Japan-India relation.  In a recent statement in Japanese Diet ( Parliament), she stated that a Chinese attack or blockade of Taiwan could constitute a “ survival threatening situation” for Japan.     

Till now , China and ASEAN were the prime destinations for Japanese investment in Asia. Given the global tension deepening , leading to geo-political turmoil, Japanese investors vowed to shift to India, leaving China  behind.

In the post-Abe period, Japanese investment  made a sharp downturn in China and erratic  trend in ASEAN.  Japanese investment in China dropped by 70 percent , from US$11,024 million in 2020 to US$3,305 million in 2024. In ASEAN -4 ( Thailand, Indonesia, Malaysia and Philippines),  Japanese investment made erratic growth -from US $ 7686 million in 2020 to US$ 9249 million in 2024 . 

In contrast.  Japanese investment in India surged by 267.0  percent in the post Abe period - from US$ 1,570 million in 2020 to US$5,341 million in 2024. These unfold India as the second single biggest destination  for receiving Japanese investment in Asia after Singapore.

The seeds of new era of India-Japan relation were sown with  diversification from bilateral to multilateral during Abe period. The relation extended for a joint partnership for economic development in third countries, such as development of AAGC project  (Asia Africa Growth Corridor) and the joint cooperation for development of Chabahar Port in Iran. The new era gave strong backbone to India-Japan special strategic and global partnership in political dynamism.

India was hailed  by Deloitte, Japan , CEO Keinichi Kimura, as an important and attractive destination for Japanese investment . Its    massive domestic market , young talent and its strategic location , which link to Middle Eastern and African market, enamor its significance for investment. These paved the way for Japanese investors to find  a new global landscape  for  China+1 strategy and  diversify supply chain and reduce dependence on single country.   

Caught in the crossfire between USA’s  MAGA and Japan’s historical political conflicts with China, India emerges a new economic ally for Japan.  It opened new opportunity  for Japan to combat  Trump’s threat of tariff war and reduce dependence on China for supply chain.  

India’s growth relies on domestic demand, unlike China. Japan relation with China, which emerged as  close economic ally for   low cost workshop, despite historical political bitterness,  went into despair with  unfolding of COVID pandemic. Japanese government granted huge subsidy to  encourage Japanese companies to disperse their manufacturing sites  from China to other  Asian region.  

India emerged 4th largest economy in the world in 2024-25, from 10^th in the world in 2014-15. It demonstrates average growth in GDP by  6.5 a year during the decade, despite hindered by COVID 19 pandemic. The growth trajectory vies India’s dream to be 3^rd biggest economy by 2028, overtaking Germany and Japan, according to Morgan Stanley. 

India has special  investors’ attractions, amid the high tariff war and protectionism in the world. Unlike China and Japan , local demand is the trigger for  companies’ profitability in India.  According to a survey by JETRO ,  It has been  forecasted that surge in  local demand will be the pillar for profitability in 2025 for Japanese companies In India. 

Eventually, spurt in automobile industry growth in India,  driven  by local demand, is a case in point. Indian passenger vehicle industry, which is dominated by Japanese investment, is the 4^th biggest manufacturer in the world. It’s growth is tied to local demand. Over 90 percent of passenger vehicles produced in the country is sold in the domestic market.

    ( Views are personal)

About the Author

S. Majumder,

Adviser , Research ( former) , JETRO (Japan External Trade Organization) New Delhi

Subrata Majumder is  former Adviser/Research Head of Japan External Trade Organization (JETRO), New Delhi office , India. He worked with JETRO over five decades.

He has been contributing regularly to national media, like Indian Press Agency, the Northlines, Millennium Post, South Asia Monitor, Echo of India  and international media like Eurasia Review ( USA) and Arabian Post (Dubai).  He is the author of “ Doing Business with Japan” ( 1994). He won JETRO’s global essay competition on the commemoration of JETRO’s 30 years