"Japan is a tech powerhouse and India is a talent powerhouse," Prime Minister Modi declared yesterday in Tokyo, encapsulating in one sentence why the 15th India-Japan Annual Summit may prove to be the most strategically consequential meeting in Asia this year. What emerged from the summit wasn't just another diplomatic exercise in mutual admiration - it was a comprehensive roadmap for technological collaboration that directly enhances strategic cooperation in critical sectors while reshaping the balance of power in the Indo-Pacific.
The timing couldn't be more telling. As great power competition intensifies and technological sovereignty becomes synonymous with national security, Modi and Japanese Prime Minister Shigeru Ishiba have crafted a partnership that bridges the gap between democratic values and strategic necessity. The joint statement, titled 'Partnership for Security and Prosperity of our Next Generation', signals that this collaboration is designed not for short-term gains but for long-term strategic positioning in an increasingly contested world.
Beyond Arms Sales
The newly signed Joint Declaration on Security Cooperation represents a quantum leap from Japan's traditionally restrictive approach to defence partnerships. With India's defence budget at ₹621,940 crore ($74 billion) for 2024-25 - making it the world's fourth-largest defence spender - there's substantial financial muscle behind these commitments. More importantly, the agreement expands military cooperation through more frequent joint exercises involving all three services, creating the operational foundation for deeper technological collaboration.
What makes this defence partnership particularly significant is its focus on next-generation capabilities rather than legacy systems. Reports suggest Japan has approached India to join the sixth-generation Global Combat Air Programme (GCAP), a move that would mark Japan's most significant departure from its post-war security doctrine. Such collaboration would not only reduce development costs for both nations but also create technological capabilities that serve as a direct counterbalance to Chinese military modernisation.
The defence dimension extends beyond conventional military hardware into cyber capabilities, space cooperation, and emerging technologies. The agreement provides a new framework to address cyber threats, recognising that modern warfare increasingly operates in digital domains where both nations face sophisticated adversaries. This cyber cooperation is particularly relevant given the integration of artificial intelligence into defence systems, where India's software expertise and Japan's hardware capabilities create natural synergies.
India's experience in managing complex borders and asymmetric threats, combined with Japan's island defence requirements and advanced sensor technologies, creates opportunities for developing specialised defence systems that address unique regional challenges. The partnership's emphasis on joint research and development means that both nations will benefit from innovations that emerge from their collaboration, reducing dependence on third-party suppliers in critical defence technologies.
The AI Revolution
Perhaps the most strategically significant outcome of yesterday's summit is the launch of the India-Japan AI Cooperation Initiative. The initiative advances collaboration in Large Language Models (LLMs), training, capacity building and support for businesses and start-ups to foster a trustworthy AI ecosystem. The emphasis on "trustworthy AI" is particularly noteworthy - it signals both nations' recognition that the AI race isn't just about capability but about creating systems that democracies can rely on.
PM Modi's invitation to PM Ishiba for India's AI Impact Summit scheduled for February 19-20 next year is the right step. This isn't ceremonial diplomacy; it's strategic planning for technological competition where the stakes couldn't be higher. As PM Modi put it, together, the two countries can "lead this century's tech revolution" in areas such as green energy, next generation mobility and logistics infrastructure.
The AI partnership is built on genuine complementarity. India's strength in software development, algorithm creation, and digital services perfectly complements Japan's expertise in robotics, precision manufacturing, and advanced hardware systems. Indian IT professionals and researchers have been at the forefront of AI development globally, while Japan's corporations like Sony, SoftBank, and Toyota have pioneered AI applications in robotics, autonomous vehicles, and industrial automation.
What makes this collaboration particularly threatening to Chinese AI dominance is its focus on creating end-to-end solutions. While China has achieved significant advances in AI through massive data collection and state-directed investment, the India-Japan partnership offers an alternative model based on innovation, private sector dynamism, and democratic values. The joint focus on startups and business ecosystem development suggests both nations understand that AI leadership requires nurturing entrepreneurial innovation, not just government investment.
The AI initiative also addresses a critical vulnerability in both nations' strategic positions. China's dominance in certain AI applications, particularly those requiring massive data sets and state coordination, has created dependencies that both India and Japan recognise as strategic liabilities. By developing joint AI capabilities, they create alternative pathways that reduce reliance on potentially hostile systems while building indigenous capabilities that enhance their strategic autonomy.
Semiconductors And Technological Sovereignty
The semiconductor dimension of the partnership, formalised through the Digital Partnership 2.0 agreement, may prove to be the most economically transformative aspect of yesterday's summit. Japan's commitment to achieving JPY 10 trillion ($68 billion) in private investment in India over the next decade demonstrates the scale of ambition underlying this cooperation.
Modi, describing Japan as an "important partner in charting India's growth story," noted that "from metros to manufacturing, from semiconductors to startups, our partnership has been strong". This continuity is important - the semiconductor partnership builds on existing investment flows rather than starting from scratch. Japan's bilateral trade with India reached $22.85 billion in FY24, with Japanese cumulative investment hitting $43.2 billion since 2000, making Japan India's fifth-largest FDI source.
The semiconductor collaboration addresses a critical chokepoint in the global technology supply chain. Japan possesses advanced capabilities in semiconductor equipment manufacturing, specialised materials, and precision components - the "picks and shovels" of the chip industry. India offers semiconductor design expertise, a growing ecosystem of chip design companies, and manufacturing capabilities that could serve both domestic and export markets.
PM Modi's visit to a semiconductor factory in Sendai highlights "the futuristic dimension of our cooperation in areas like emerging technologies, AI and semiconductors". This isn't just about manufacturing - it's about creating a complete ecosystem that spans design, fabrication, assembly, and testing. Such comprehensive capabilities are essential for technological sovereignty in an era where semiconductor supply chains have become weapons of geopolitical competition.
The timing of this semiconductor partnership is particularly strategic given the ongoing global chip shortage and increasing weaponisation of technology in great power competition. By developing joint capabilities in this sector, India and Japan can reduce their dependence on potentially hostile supply chains while building technological depth that enhances their strategic autonomy.
The Strategic Context
What makes yesterday's agreements particularly significant is how they fit into the broader strategic landscape of Indo-Pacific competition. The joint statement's emphasis on commitment to a "free, open, peaceful, prosperous and rules-based" Indo-Pacific is a direct challenge to China's vision of regional order.
The defence, AI, and semiconductor cooperation creates technological capabilities that serve multiple strategic purposes. They enhance both nations' individual capabilities while creating joint assets that strengthen their positions in other partnerships, particularly within the QUAD framework. The partnership doesn't require either nation to abandon other relationships; instead, it creates capabilities that strengthen both in all their strategic interactions.
The economic security dimension of the partnership, formalised through the Economic Security Initiative, recognises that modern strategic competition operates across multiple domains simultaneously. The Memorandum of Cooperation in Critical Minerals creates mechanisms for joint exploration, processing technology development, and coordinated stockpiling - essentially building strategic depth in materials as important as oil was in the 20th century.
Implementation and Impact
The real test of yesterday's summit will be in implementation. Previous India-Japan summits have sometimes promised more than they delivered, but the detailed framework agreements suggest both sides have learned from past experiences. The creation of specific institutional mechanisms - the AI Cooperation Initiative, the Digital Partnership 2.0 framework, and the Joint Declaration on Security Cooperation - provides concrete pathways for turning political commitments into operational capabilities.
The success of this partnership will ultimately be measured not in diplomatic communiques but in joint defence systems that enhance deterrence, AI innovations that create new industries, and semiconductor capabilities that reduce strategic dependencies. Japanese discipline with processes will be a big support for the Indian start up and small and medium enterprises as they grow in strength and performance. If executed well, the India-Japan partnership in these critical sectors could serve as a model for how democratic middle powers can collaborate to maintain their strategic autonomy in an era of great power competition.
The Tokyo summit will be remembered as the moment when two of Asia's most important democracies moved beyond talking about technological sovereignty to actually building it.
(Subimal Bhattacharjee advises on technology policy issues and is former country head of General Dynamics)
Disclaimer: These are the personal opinions of the author
