E-Paper
India-Japan relations: Tryst with AI
This article is authored by Varuna Shankar, associate fellow, India’s World Magazine and non-resident Vasey Fellow, Pacific Forum.
In a recent development, during the 18th Japan-India Foreign Ministers’ Strategic Dialogue held in January 2026 in New Delhi, a new push for bilateral cooperation in Artificial Intelligence (AI) was announced. This is a significant stride and signifies the maturation of the Special Strategic and Global Partnership between the two countries. external affairs Minister S Jaishankar and his Japanese counterpart, Toshimitsu Motegi, launched a new AI dialogue to promote strategic collaboration in AI through joint research, initiatives between universities and companies, the development of Large Language Models (LLMs), and cooperation to foster a trustworthy AI ecosystem.
The Japan–India AI Strategic Dialogue is established under the Japan–India AI Cooperation Initiative (JAI). Furthermore, Motegi stated that Japan would invite 500 highly skilled AI professionals from India by 2030 to promote joint research and development. The recently concluded AI Impact Summit, hosted by India, is a testament to the critical importance of emerging technologies in an increasingly unstable geopolitical environment. This article examines the trajectory and potential of this partnership in the AI sector.
There is rapid growth in India’s AI ecosystem, driven by both a strong government push for digital innovation and an expanding talent pool. It is witnessing transformative growth, positioning the country as a significant player in the global AI race. The NASSCOM report indicates that the AI market in India is projected to reach $ 17 billion by 2027, growing at a CAGR of over 25%. India’s strength lies in the impressive community of software developers, which is at the core of India’s AI revolution. More than 420,000 professionals are employed in AI-related roles, making India one of the fastest-growing AI/ML developer communities in the world. An estimated 79% of Indian businesses plan to increase their AI investments within the next two years, and approximately 70% of Indian startups are integrating AI solutions into their products and services. By the end of 2025, AI is anticipated to contribute approximately $ 500 billion to India’s GDP.
India’s AI ecosystem has a critical element that differentiates it from other emerging economies. It is being shaped by grassroots-level innovation and commercial adaptability. This reflects a bottom-up momentum that led to the widespread adoption of AI among Indian startups and enterprises. AI has moved beyond niche applications to being integrated into the mainstream economic and developmental activities. Sectors such as agriculture, healthcare, finance, and governance are seeing the early effects of AI-driven transformation. This will be further accentuated by a dynamic, increasingly tech-oriented startup ecosystem, rapid digitalisation, and strong institutional support. As a result, this will lead to enhanced service delivery and efficiency gains, ultimately creating social impact such as agricultural productivity, healthcare access, and financial inclusion. India is tailoring AI adoption to its development priorities, blending demographic advantage, economic necessity, and digital proficiency.
The Indo-Pacific region has become a critical region in the ongoing unstable geopolitical environment. The escalating tariff war has further worsened the situation, reinforcing the need for an alternative to the traditional partnership. In this context, partnerships with technologically advanced and like-minded nations such as Japan are both natural and necessary. There is an expansion in the avenues of collaboration beyond the conventional prism. India’s growing digital economy and Japan’s long-standing interest in Indo-Pacific collaboration provide fertile ground for expanded bilateral AI cooperation.
Japan is proving to be a valuable partner for India’s AI ambitions. It has pledged investments worth $ 68 billion in private-sector investments in India over the next decade, focusing on infrastructure, digital, and technology sectors. It provides leadership in semiconductor fabrication, robotics, and computing infrastructure. Furthermore, it has superior hardware, data centres, and high-performance computing.
The Indian government has taken active steps to position the country as a global hub for responsible and inclusive AI, recognising AI’s transformative potential across sectors. This includes policy initiatives such as the India AI Mission and the National Strategy for Artificial Intelligence by NITI Aayog, as well as public investments in AI research centres. JICA has played a critical role in this framework by contributing to the design and development of an AI-ready data platform under these strategies. It supported the development of AI Kosh, a unified platform that provides centralised access to thousands of high-quality datasets, AI models, and computing resources. It also promotes the development of AI infrastructure, including digital public infrastructure, data centres, and AI-ready datasets, while ensuring AI safety and governance. Japanese infrastructure bridges India’s computing deficits by connecting governments, academia, and industry in partner countries through coordination with a range of donors and partner organisations, including drawing on Japan’s domestic expertise and stakeholder networks.
Consequently, the Indian government has actively pursued global partnerships to scale innovation and build resilient AI infrastructure. There are joint ventures under JISSI (Japan-India Startup Investment/Skills Initiative) that incubate ethical AI startups, fortifying sovereignty among tech rivalries. Furthermore, India and Japan renewed the MoC on Digital Partnership 2.0 in 2025 to promote collaboration in the digital sector, including AI, Digital Public Infrastructure, semiconductors, R&D, and start-ups.
The recent significant collaboration is the tripartite contract signed in April 2025 by the Government of Telangana, NTT DATA (Japan), and Neysa (Tokyo). It aims to establish an AI Data Centre Cluster in Hyderabad, Telangana. The project involves an investment of ₹10,500 crore ($ 1.25 billion). The facility will have a total capacity of 400 MW of data centre infrastructure and will host up to 25,000 GPUs, making it India’s largest AI compute facility.
There is synergy in the India-Japan AI ecosystem that needs to be tapped. It would require leveraging complementary assets. While Japan is grappling with a projected shortfall of over 500,000 digital workers by 2030 due to demographic deficit, India’s vast engineering talent and diverse datasets present a bright opportunity. The 500-expert invitation programme by Japan enables channelising the human resource through hands-on training, accelerating applications in healthcare (remote diagnostics for rural areas) and eldercare robotics, R&D from Indian global capability centres, refining large language models for supply chain optimization, cybersecurity, agriculture (predictive cropping via robotics), and smart cities—fuelling a $ 500 billion digital economy ambition. By pooling their expertise, India and Japan are actively setting global trends.
However, a stronger push can be made for further collaboration to enhance the application of AI in the health care sector. This can build on NITI Aayog’s identification of health care as a priority sector and Japanese expertise in this field, and supportive AI infrastructure, where Japan has demonstrated global leadership in GPU technologies, high-performance computing, and advanced electronics. Joint product development, mentorship, and research exchange are critical pillars of partnerships between Indian incubators and Japanese companies. India’s AI software capabilities, which enable end-to-end innovation, are complemented by Japan’s advanced hardware ecosystem, encompassing robotics, sensors, and embedded systems. Japanese firms are already entering India’s hardware and infrastructure space, not just as suppliers but as co-builders.
Japan and India are poised to accelerate breakthroughs in AI automation and next-gen digital ecosystems. The deal at its core fuels an AI Innovation Bridge, linking Japan’s global tech giants with India’s rising startups. It is transforming into a launchpad for funding, joint research, and market expansion. The Japan-India Joint Vision for the Next Decade, unveiled during Prime Minister Narendra Modi’s August 2025 visit to Japan, reaffirms this commitment. This development also coincides with the 10th anniversary of Japan’s Free and Open Indo-Pacific (FOIP) strategy, positioning India as its indispensable ally. Both countries are signalling that their alliance is built to withstand global turbulence. This agreement goes beyond economic security and lays the groundwork for the 75th anniversary of diplomatic relations in 2027. AI functions as a public good, such as health care, smart cities, agriculture, and education, and, therefore, the partnership should move beyond isolated projects and private incentives into public sector engagement and institutionalise collaboration, ensuring alignment with national priorities. India and Japan are committed to leading the technological revolution in the upcoming decades, where technological leadership will determine global power. As India continues to expand its computing capacity and AI ecosystem, collaboration with Japan will become imperative.
(The views expressed are personal)
This article is authored by Varuna Shankar, associate fellow, India’s World Magazine and non-resident Vasey Fellow, Pacific Forum.
