Against the backdrop of trade-related uncertainties with the United States, Prime Minister Narendra Modi on Friday (August 29, 2025) made a strong case for investing in India, declaring that the Indian economy will “very soon” be the third largest economy in the world.
Addressing the India-Japan Economic Forum in Tokyo, Mr. Modi said that most Japanese companies find India attractive, adding that India is a “springboard” to access the Global South. Welcoming the visiting Indian Prime Minister, Japan announced a private investment target of ¥10 trillion for India over the next decade.
“Japanese companies have invested more than $40 billion in India. In the last two years alone, there has been private investment of $13 billion. JBIC [Japan Bank of International Cooperation] says India is the most ‘promising’ destination. JETRO [Japan External Trade Organisation] says 80% of companies want to expand in India, and 75% are already profitable,” the Prime Minister said. “Which means, in India, capital does not just grow, it multiplies,” he added.
Joint AI initiative
After the India-Japan Annual Summit, Japanese Prime Minister Shigeru Ishiba said the two countries had discussed a “wide range of areas, including defence and the economy”. They launched an India-Japan AI Initiative as well as an Economic Security Initiative to promote supply chain resilience in sectors like pharmaceuticals, critical minerals, and new and emerging technologies.
The official interaction between the two Prime Ministers also saw the launch of the India-Japan Small and Medium Enterprises (SMEs) Forum to strengthen cooperation between SMES in both nations.
PM Modi in Japan LIVE | August 29, 2025
‘Fastest growing economy’
Mr. Modi reached Japan early on Friday (August 29, 2025), starting his two-nation tour of Japan and China against the backdrop of unstable trade ties with the United States, whose President Donald Trump has imposed 50% tariffs on imports from Indian. The penalty tariffs imposed on India on August 6 came into effect on August 27, just a day before Mr. Modi embarked on his tour.
“India is now the fastest-growing major economy in the world, and very soon, it will become the world’s third-largest economy,” the Prime Minister said. Noting that India is “contributing to 18% of global growth”, he said, “The country’s capital markets are giving good returns, and we have a strong banking sector.”
On July 31, Mr. Trump had criticised India for its high tariffs and cited its purchases of Russian crude as his main reason for imposing the additional penalty tariff. He said, “I don’t care what India does with Russia. They can take their dead economies down together.” India had subsequently described the U.S. decision to impose penalty tariffs on India as “unfair, unjustified and unreasonable”.
‘Indispensable role in Indo-Pacific’
The U.S., Japan, and India are all members of the Quad initiative, which was started during Mr. Trump’s first term in 2017, with Australia being the fourth member. The dialogue between Mr. Modi and the Japanese leadership comes ahead of the Quad summit that India is expected to host later this year.
Reflecting their bilateral commitment to the Indo-Pacific region, the two countries issued a Joint Declaration on Security Cooperation that underscores “the indispensable role” of India and Japan for a “free, open, peaceful, prosperous and coercion-free Indo-Pacific region”. They also recorded their opposition to any “destabilising or unilateral actions” in the maritime domain.
Financing green energy
Noting that India has enjoyed “deep economic ties with Japan”, Mr. Modi held up their collaborations in the auto sector as the model for the two countries to “recreate the same magic in batteries, robotics, semiconductors, shipbuilding, [and] nuclear energy”.
At the end of the annual summit led by the two Prime Ministers, the two countries announced 13 outcomes, including several MoUs, such as the agreement on a Joint Credit Mechanism aimed at financing green energy, security cooperation, and cooperation in mineral resources. An action plan was adopted to promote the two-way exchange of five lakh people between India and Japan, including 50,000 skilled and semi-skilled personnel from India to Japan over the next five years.
Calling for India-Japan cooperation to take advantage of business opportunities in Africa, Mr. Modi said, “India is the springboard for Japanese businesses to the Global South. Together, we will shape the Asian century for stability, growth and prosperity.”
Opening up nuclear sector
Mr. Modi said that “sensitive sectors” like defence and space have been “opened up” for the private sector, and now India is also opening up the nuclear energy sector. “These reforms reflect our determination to build a developed India. We have the commitment, the conviction, and the strategy, and the world has not just recognised it but also appreciated it. S&P Global has upgraded India’s credit rating after two decades. The world is not just watching India, it is counting on India,” the Prime Minister said.
He called for cooperation in manufacturing, technology and innovation, the green energy transition, next-generation infrastructure, and skill development.
Published – August 29, 2025 12:39 pm IST
AloJapan.com