The ground is fertile for Japan-India green economy partnerships
The two countries already have long-standing ties, including ancient cultural links through Buddhism and the more recent collaboration between Maruti Udyog Limited and Suzuki Motor's — started in 1981, the joint venture, which has captured half of the Indian car market, has only strengthened over time.
The next set of opportunities lies in green and advanced technologies, clean energy first and foremost. As with Maruti Suzuki, this sector offers fertile ground for bringing together Japan's design and research prowess with India's vast human resources and low-cost manufacturing.
The primary beneficiaries would be solar, green hydrogen and green ammonia manufacturing. One of India's fastest-growing clean energy firms, ReNew Power, is already slated to produce 100,000 tonnes of green ammonia — made entirely using renewable energy — every year in the Indian state of Odisha in partnership with JERA, Japan's largest power generation company.
Meanwhile, Japan has been a consistent and significant investor in India. Between April 2000 and September 2024, its cumulative foreign direct investment amounted to an impressive $43 billion, and the Japan Bank for International Cooperation has committed to financing Indian renewable energy ventures, including through a $600 million fund for sustainability projects.
The investments are part of a broader strategy to support India's goal of achieving 500 gigawatts of non-fossil fuel-based power capacity by the end of the decade. By 2020, the country already achieved a 36% reduction in emissions intensity compared with 2005 levels (the target being 33% by 2030) and needs to add roughly 50 GW of clean energy capacity every year from here onward.
This goal has received a boost through recent price discoveries — processes that determine the market price of electricity — in four energy auctions. These projects combine solar and wind energy with storage to ensure renewable electricity is available 24/7 (with 80% to 90% availability), and the prices discovered were less than 5 rupees ($0.06) per kilowatt-hour. At the same time, new coal-based capacity was allocated at slightly higher prices, underscoring the growing competitiveness of renewables in India.
Combined with the domestic market's appetite for clean energy, the government's Make in India initiative lays out a much easier platform for foreign investors. A renewed focus on boosting India's solar manufacturing capacity — especially as a hedge against China's dominance in this field — would not only serve Japan's interests but also stabilize supply chains for much of Asia.
Reports suggest that Japan is devising ways to address the issue of solar waste proliferation by recycling old solar panels and recovering most of the useful metals. Technology transfer and setting up specialized facilities in India may offer opportunities as the country is expected to produce about 600,000 tonnes of solar waste by 2030.
Along with Taiwan's Foxconn, Softbank announced in 2015 that it would invest $20 billion in India's still-fledgling solar industry. After spending heavily in renewables, the company sold its assets in 2021: Helping India manage its solar waste would be one way to push this venture toward its logical next step.
Opportunities also abound in manufacturing semiconductors and in switching harder-to-abate sectors such as cement, steel, textiles and petrochemicals to greener fuels.
The new tariff structure announced by Washington places India in a favorable position, so now is a good time for Japan to invest in the South Asian country and help it position itself as a healthy competitor to China. In the semiconductor sector, India is expected to contribute to 8-10% of international supply in a global market estimated to be worth $420 billion by 2030, according to the head of the India Electronics and Semiconductor Association.
By then, Japan itself plans to triple its semiconductor sales to ¥15 trillion ($105 billion), which underscores the crucial role that this sector plays in modern economies.
This is not to say that traditional avenues of cooperation need to take a back seat. For instance, sales of electric cars in India dropped by 13% in 2024 compared to the previous year as customers increasingly opt for the convenience of mild and strong hybrid vehicles, which Japanese carmakers have long championed along with hydrogen-fueled power trains.
Indian car sales soared to 4.3 million last year and the subtle shift in consumer preferences may open a unique market for Japanese technology, with the potential to apply hybrids and hydrogen fuel cells to both private and heavy-duty vehicles. Greening vehicles would be a major step forward for India as road transport accounted for 12% of its emissions last year.
Both India and Japan have much to gain from each other. As long-standing partners who have collaborated successfully before, there is mutual trust and confidence in each other's capabilities — which are especially precious as countries seek alternatives to the world's current financial and industrial power centers.
By establishing stable supply chains of high-quality semiconductors, clean energy components and green fuels, India's engagement with Japan could become the preeminent bilateral cooperation that brings stability in these times of uncertainty and accelerates the switch to a low-carbon economy.
Ajay Mathur is a clean energy expert and former director general of the International Solar Alliance, a global intergovernmental organization dedicated to advancing solar power adoption.
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