India-Japan Economic Ties Set to Deepen Through Mid-Sized Industry Partnerships: FICCI-SAM Report
New Delhi, March 14 – The next phase of economic cooperation between India and Japan is poised to be significantly driven by partnerships between Japanese mid-sized enterprises, known as Chuken, and India's dynamic mid-sized manufacturing firms, according to a new report by the Federation of Indian Chambers of Commerce and Industry (FICCI) in collaboration with Shardul Amarchand Mangaldas & Co (SAM & Co).
Chuken-to-Chuken Partnerships: A New Era of Collaboration
The report, titled 'India-Japan Economic Partnership: Partnering for a Secure, Innovative, and Sustainable Future', emphasizes that these 'Chuken-to-Chuken' collaborations can facilitate deeper technological exchange, enhance production capabilities, and shift the bilateral relationship beyond traditional supplier models toward a more integrated co-creation framework.
Many Indian mid-sized companies already serve as tier-1 and tier-2 suppliers to global manufacturers, bolstered by strong engineering capabilities, international certifications, and growing research and development capacity. This operational depth and readiness for expansion make them natural partners for Japanese firms seeking to diversify supply chains and strengthen manufacturing collaboration across the Indo-Pacific region.
High-Potential Sectors for Future Cooperation
The report identifies several key sectors with immense potential for future India-Japan collaboration:
- Semiconductors & Electronics: India's rapidly growing electronics market, supported by robust policy initiatives, combined with Japan's upstream technological strengths, can enable joint development of Outsourced Semiconductor Assembly and Test (OSAT) and Assembly, Testing, Marking, and Packaging (ATMP) facilities, power semiconductors, and deeper supply chain integration.
- Automotive, EVs & Mobility: India's increasing electric vehicle penetration and domestic supplier ecosystem create strong complementarities with Japan's advanced automotive technologies, EV components, and battery systems, fostering innovation in sustainable mobility solutions.
- Pharmaceuticals & Healthcare: With India's global leadership in generic medicines and Japan's innovation-driven ecosystem, both nations can collaborate on Active Pharmaceutical Ingredients (APIs), vaccines, digital R&D, and regulated market manufacturing, enhancing healthcare access and security.
- Clean Energy: Japan's clean energy transition goals align with India's rapid renewable expansion, which includes 262.7 gigawatts of renewable energy capacity, opening new opportunities in hydrogen, ammonia, and grid-scale storage technologies.
- Defence & Maritime: Recent defence export policy reforms in Japan and India's industrial corridors pave the way for joint production in electronics, sensors, maritime systems, and co-development of next-generation platforms. Additionally, India's expanding shipbuilding capacity and maritime infrastructure complement Japan's advanced ship design and marine engineering capabilities, supporting collaboration in commercial vessels, green shipping, and resilient maritime supply chains.
- Infrastructure & Digital Finance: Japan's expertise in railway and aviation—spanning signalling, safety systems, high-speed mobility, and Maintenance, Repair, and Overhaul (MRO)—can accelerate India's infrastructure modernization. Meanwhile, India's digital public infrastructure and Japan's financial institutions are forming deep partnerships in digital lending, payments, AI-driven services, and Global Capability Centre (GCC) expansion.
Strategic Rationale and Bilateral Strengths
The report underscores that India-Japan economic engagement has entered a decisive new phase, supported by sustained bilateral investments, resilient trade flows, and unprecedented policy alignment. Japan is currently India's fifth-largest investor, with cumulative Foreign Direct Investment reaching USD 45.69 billion and over 1,500 Japanese companies operating in India.
Ongoing global supply chain reconfiguration, driven by geopolitical shocks, climate-linked risks, and economic security considerations, has strengthened the strategic rationale for deeper collaboration. India's role is expanding due to strong macroeconomic performance, a large consumer base, rapid infrastructure growth, and a series of industrial policy reforms. Japan, with its global technological leadership in semiconductors, advanced manufacturing, mobility systems, and specialty materials, is seeking diversified and trusted production bases—making India a natural partner for the next decade.
Together, India and Japan are uniquely positioned to co-create resilient, innovation-led, and sustainable supply chains for the next generation of global industries. The new investment commitments, combined with shared values and strong institutional architecture, are set to shape one of the most important bilateral economic relationships of the coming decade, the report concludes.
