{"id":16652,"date":"2026-06-17T05:36:56","date_gmt":"2026-06-17T05:36:56","guid":{"rendered":"https:\/\/tractus.jp\/?p=16652"},"modified":"2026-06-17T05:50:00","modified_gmt":"2026-06-17T05:50:00","slug":"india-and-japan-the-rising-and-shining-sun","status":"publish","type":"post","link":"https:\/\/tractus.jp\/en\/india-and-japan-the-rising-and-shining-sun\/","title":{"rendered":"India and Japan: The Rising and Shining Sun"},"content":{"rendered":"\n
\n

\u201cWe can\u2019t compete with Uniqlo in India<\/em>\u201c. <\/p>\n<\/blockquote>\n\n\n\n

A Japanese apparel client said this to us while planning their India entry. They were right. But they were also missing the point. India does not ask you to compete with giants. It asks you to build something different. That distinction sits at the heart of Japanese investment in India today.<\/p>\n\n\n\n

Toyota Kirloskar Motor and Uniqlo offer the clearest blueprints. Different sectors, different decades, but the same playbook: deep localization, the right partner, and a long-term horizon.
Toyota Kirloskar Motor entered India in 1997 with a joint venture and a disciplined vendor development philosophy. Through sustained investment, locally sourced parts now exceed 87 percent. The company introduced strong hybrid technologies aligned with India\u2019s emissions priorities, a fit that has paid off. In 2024, Toyota Kirloskar Motor recorded its highest ever calendar year sales of 326,329 units, a 40 percent jump over 2023, and is now positioned as a long-term manufacturing and export base.<\/p>\n\n\n\n

Uniqlo took a different path. The company entered India in 2019 through a joint venture with Reliance Retail, significantly reducing market entry and real estate risk. Rather than rapid scale, Uniqlo started with flagship stores in Delhi and Mumbai, refining product mix and pricing. Prices were localized aggressively, around 20 to 30 percent below Japan and most other markets, with the brand concentrated on core, season agnostic essentials. Today, Uniqlo operates 16 stores across India. In FY2025, revenue grew 44 percent to cross \u20b91,100 crore (about US$130M), and the company is targeting \u20b93,000 crore (about US$360M) within three years at 30 to 40 percent annual growth.<\/p>\n\n\n\n

Behind both stories sits a longer one. Maruti Suzuki\u2019s four decade run, beginning with a 1981 joint venture with the Indian government, localization taken to its logical extreme, and a 40 percent plus share of India\u2019s passenger vehicle market, remains the foundational case study for any Japanese firm entering India. Each story looks different on the surface. The underlying logic is identical.<\/p>\n\n\n\n

The lesson for Japanese companies is clear: India rewards patience over speed, local integration over replication, and partnership over isolation. As global supply chains are reshaped by geopolitics and the imperative to diversify beyond traditional hubs, India stands out as a strategic destination, not a tactical bet.<\/p>\n\n\n\n

Two Suns, Stronger Together: What Changed In 2025<\/h2>\n\n\n\n

Japan and India, the Rising Sun and a Shining new economic power, are forming one of Asia\u2019s most consequential partnerships. Three developments in 2025 made this concrete.<\/p>\n\n\n\n

    \n
  • A \u00a510 trillion commitment.\u00a0<\/strong>At the 15th India and Japan Annual Summit in August 2025, both governments set a target of \u00a510 trillion (about US$68B) in Japanese private investment over the next decade, covering AI, semiconductors, critical minerals, mobility, clean energy and healthcare. The previous \u00a55 trillion target (2022 to 2026) was reached ahead of schedule.<\/li>\n\n\n\n
  • People before factories.\u00a0<\/strong>A bilateral action plan now covers 500,000 personnel exchanges over five years, including 50,000 skilled Indian professionals trained in Japan. India\u2019s AI Impact Summit (February 2026) and a new Economic Security Initiative complete the architecture.<\/li>\n\n\n\n
  • Industry breadth, not just autos.\u00a0<\/strong>Japanese investment is no longer concentrated in cars and steel. It now spans EVs, semiconductors, renewables, real estate, aerospace, clean hydrogen, critical minerals, and digital services. Japan\u2019s large manufacturers are also bringing hundreds of Indian SMEs into their tier 2 and tier 3 supplier ecosystems.<\/li>\n<\/ul>\n\n\n\n

    The combination is meaningful. Japan\u2019s discipline, capital and technology, paired with India\u2019s scale, demographics and improving business climate.<\/p>\n\n\n\n

    Why India Now<\/strong><\/h2>\n\n\n\n

    India has spent the last decade simplifying the rules: a unified tax system (GST), easier FDI norms, faster approvals through Make in India and Digital India, and a Production Linked Incentive (PLI) framework that has attracted committed capital from global manufacturers.
    The demographics complete the picture. About 65 percent of Indians are of working age. By 2030, around 80 percent of households are expected to be middle income, with consumer spending projected to cross US$5.2 trillion (World Economic Forum). India is no longer a low-cost option alone. It is one of the world\u2019s largest end markets, with the workforce to serve it.<\/p>\n\n\n\n

    \nhttps:\/\/tractus-asia.com\/blog\/india-policy-and-future-growth-drivers\/embed\/#?secret=GbZiOgcLVj#?secret=7qSpmHuEgE\n<\/div><\/figure>\n\n\n\n

    Sectors Where The Partnership Can Build The Most<\/strong><\/h2>\n\n\n\n
    Sector<\/strong><\/td>Why it matters<\/strong><\/td><\/tr>
    Semiconductors and electronics<\/td>With global supply diversification accelerating, India and Japan can co develop a high technology hub, supported by India\u2019s Semiconductor Mission (ISM), the Electronics Component Manufacturing Scheme (ECMS), and Japanese technology transfer.<\/td><\/tr>
    Automotive, EVs and batteries<\/td>Japanese OEMs and their tier 1 and tier 2 suppliers are already established. EV adoption and supply chain reorientation now position India as a base for both domestic demand and exports.<\/td><\/tr>
    Renewables, clean energy and green hydrogen<\/td>India\u2019s net zero trajectory aligns with Japanese strengths in energy equipment, hydrogen, ammonia and ESG compliant manufacturing.<\/td><\/tr>
    Infrastructure and urban mobility<\/td>Industrial corridors, the Mumbai to Ahmedabad bullet train, metros and smart cities continue to draw on Japanese expertise and concessional financing.<\/td><\/tr>
    R&D, IT services and GCCs<\/td>Japanese firms are increasingly using India for software, R&D, shared services and Global Capability Centres. The combination is cost efficiency alongside deep technical talent.<\/td><\/tr>
    Pharmaceuticals, specialty chemicals and medical devices<\/td>Quality systems, regulatory rigor and India\u2019s scale create natural complementarity in pharma, agrochemicals and medical devices.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    Site Selection: Choosing The Right Ground<\/h2>\n\n\n\n

    Scale and ambition do not guarantee success. In manufacturing, semiconductors, EV supply chains and infrastructure, where investment is placed within India often matters more than the size of the investment<\/strong>.<\/p>\n\n\n\n

    States vary significantly on the factors that determine outcomes: port access, power and grid reliability, labor skills, logistics connectivity, regulatory clarity, ease of land acquisition, and state level incentive packages. Leading manufacturing states such as Tamil Nadu, Gujarat, Maharashtra, Karnataka, Andhra Pradesh and Uttar Pradesh<\/strong> each offer different advantages, and the right choice depends on the specific project.<\/p>\n\n\n\n

    For Japanese firms, the Japanese Industrial Townships (JITs)<\/strong>provide additional comfort. Neemrana in Rajasthan, Sri City in Andhra Pradesh, Mandal Bechraj in Gujarat and others offer Japan style infrastructure, plug and play readiness, and the proximity of Japanese neighbors. Bodies such as JETRO, JBIC, and NEXI<\/strong> further support market intelligence, project financing and political risk insurance.<\/p>\n\n\n\n

    The cost of getting site selection wrong is meaningful. Poor location choices raise costs, delay timelines and erode the competitive advantages that made India attractive in the first place.<\/p>\n\n\n\n

    \nhttps:\/\/tractus-asia.com\/blog\/india-site-selection-pernod-ricard-nagpur\/embed\/#?secret=8ZZVR8swOj#?secret=ZjNzQ04fZz\n<\/div><\/figure>\n\n\n\n

    Shadows Beneath The Rising Sun: Risks To Navigate<\/strong><\/h2>\n\n\n\n

    India\u2019s progress is real, but the gap between leading states and lagging ones remains wide. Four areas warrant honest assessment.<\/p>\n\n\n\n

      \n
    • Infrastructure and logistics.\u00a0<\/strong>Tamil Nadu, Gujarat and Maharashtra offer reliable power and port connectivity. Many other states do not. Logistics costs in India still account for 13 to 14 percent of GDP, against 8 to 9 percent in developed markets.<\/li>\n\n\n\n
    • Land and regulatory clarity.\u00a0<\/strong>Despite single window systems, industrial land acquisition and environmental clearances can take 6 to 24 months depending on state policies and project profile. Greenfield projects involving forest, coastal or multi department approvals tend to be slowest.<\/li>\n\n\n\n
    • Skill gaps in specialized areas.\u00a0<\/strong>General labor is plentiful. However, semiconductor grade operators, clean energy technicians and similar specialized roles often require structured training programs or expatriate support during the 12 to 18 months ramp up phase.<\/li>\n\n\n\n
    • Multi layered government coordination.\u00a0<\/strong>PLI incentives, state subsidies, utility approvals, and local compliances sit with different authorities. Successful execution typically requires sustained engagement across central ministries, state departments and district level agencies, rather than one-time approvals.<\/li>\n<\/ul>\n\n\n\n

      These risks are navigable, but they are real. They are also the reason a partner with deep local insight and on ground execution capability is often the difference between a project that lands on time and one that does not.<\/p>\n\n\n\n

      Harnessing The Moment: A Strategic Opportunity<\/h2>\n\n\n\n

      India and Japan are entering a decade of high impact growth. With aligned priorities across manufacturing, advanced technology, clean energy, digital services and supply chain resilience, the bilateral relationship has never been stronger.
      Success, however, will not be automatic. It will depend on disciplined location choices, regulatory navigation, and execution on the ground. For Japanese firms, five priorities stand out.<\/p>\n\n\n\n

        \n
      • Use India as a production and export base, not just a market.\u00a0<\/strong>With competitive costs and growing export potential, \u201cMake in India, sell to Asia, Africa and beyond\u201d is now a viable thesis.<\/li>\n\n\n\n
      • Build the vendor ecosystem, not just the factory.\u00a0<\/strong>Collaborating with Indian SMEs helps meet global quality standards while capturing local cost and sourcing advantages.<\/li>\n\n\n\n
      • Tap incentives early.\u00a0<\/strong>PLI extensions, the Electronics Component Manufacturing Scheme (ECMS), the expanded India Semiconductor Mission (ISM), OSAT and ATMP incentives, and active state level competition between Tamil Nadu, Gujarat, Maharashtra, Uttar Pradesh and Andhra Pradesh all reward early movers.<\/li>\n\n\n\n
      • Combine Japanese quality with Indian scale.\u00a0<\/strong>Bring advanced manufacturing, automation and quality systems, and pair them with India\u2019s workforce, cost base and demand.<\/li>\n\n\n\n
      • Move beyond legacy sectors.\u00a0<\/strong>EVs, batteries, electronics, renewables, hydrogen, medical devices, and digital manufacturing services are where the next decade of growth will be concentrated.<\/li>\n<\/ul>\n\n\n\n

        As global supply chains continue to shift away from concentrated hubs, India\u2019s combination of large domestic demand, improving industrial policy and competitive state level incentives positions it as a credible China plus one manufacturing base, and increasingly a China alternative one.
        For Japanese executives, the question is no longer whether to deepen India exposure. It is how thoughtful, and how soon.<\/p>\n\n\n\n

        \n\n\n\n

        Anand Verma is the Consulting Manager of Tractus India<\/em>.<\/p>\n","protected":false},"excerpt":{"rendered":"

        \u201cWe can\u2019t compete with Uniqlo in India\u201c.  A Japanese apparel client said this to us while planning their India entry. They were right. But they were also missing the point. India does not ask you to compete with giants. It asks you to build something different. That distinction sits at the heart of Japanese investment […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22,1],"tags":[],"class_list":["post-16652","post","type-post","status-publish","format-standard","hentry","category-insights","category-uncategorized"],"yoast_head":"\nIndia and Japan: The Rising and Shining Sun - Tractus Japan<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/tractus.jp\/en\/india-and-japan-the-rising-and-shining-sun\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"India and Japan: The Rising and Shining Sun - Tractus Japan\" \/>\n<meta property=\"og:description\" content=\"\u201cWe can\u2019t compete with Uniqlo in India\u201c.  A Japanese apparel client said this to us while planning their India entry. 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