With a population of more than 1.4 billion and strong growth prospects, India is being identified as a market where Japanese companies should diversify sourcing and production outside China. Closer Japan-India cooperation is also regarded as important from an economic security perspective.
India has a large market with a population of more than 1.4 billion, and the IMF forecasts real growth of 6.4% in fiscal 2026 and 6.7% in the following fiscal year. This growth could drive not only an expansion of the consumer market but also increased demand for capital investment, parts and materials.
Rising incomes are expected to increase purchases of automobiles and consumer electronics, while market opportunities are likely to expand beyond finished products to production equipment and parts. Growth could extend upstream into manufacturing, although this will depend on the development of infrastructure such as power and logistics.
At the Japan-India summit in July 2026, a joint declaration on economic security cooperation was issued, proposing cooperation to strengthen supply chains in areas such as semiconductors and storage batteries. The importance of the Indian market has been emphasized as part of a strategy to diversify supply chains.
Some have pointed out that it would be difficult for Japanese companies to build sustainable relationships if they view India merely as a backup production base. Japan needs to support the development of local industries in ways that generate employment and build technological capabilities, along with initiatives that create mutual benefits.