India and Japan Eye New Investment Fund for Semiconductors and Clean Energy
India and Japan explore a follow-on fund to boost semiconductors, clean energy, and AI investments during FM Sitharaman's meeting with JBIC Governor.
India and Japan are looking to significantly scale up their economic partnership, exploring the creation of a follow-on fund to the existing USD 600 million India-Japan Fund. This move comes as both nations seek to deepen financial cooperation and accelerate investments in critical future-tech sectors, including semiconductors, clean energy, and advanced manufacturing.
The discussions took place during a high-level meeting between Union Finance Minister Nirmala Sitharaman and Kazuhiko Amakawa, the Governor of the Japan Bank for International Cooperation (JBIC). The meeting occurred on the sidelines of the World Bank-IMF annual meetings held in Bangkok, Thailand.
Expanding the Investment Horizon
A central point of the dialogue was the success of the initial India-Japan Fund, which has already made strategic inroads into bioethanol and electric mobility. Governor Amakawa emphasized the fund's effectiveness and expressed a strong desire to establish a follow-on fund to further support sustainable development and the energy transition.
Beyond the dedicated fund, the two leaders discussed expanding Japanese participation in the National Investment and Infrastructure Fund (NIIF), ensuring a robust institutional framework for large-scale capital flow into Indian projects.
Strategic Focus: Semiconductors and AI
With the global race for chip sovereignty intensifying, the meeting highlighted a growing Japanese interest in India's semiconductor ecosystem. Specifically, opportunities in Dholera, Gujarat, were discussed as key areas for potential collaboration.
The conversation also ventured into the realm of emerging technologies:
- Artificial Intelligence: Exploring synergies in AI development and application.
- Data Centres: Minister Sitharaman specifically encouraged Japanese firms to invest in data centres within Tier 2 and Tier 3 cities.
- Urban Growth: By highlighting cities like Visakhapatnam, the Finance Minister aimed to ensure that digital infrastructure investment leads to balanced urban growth across India, rather than being concentrated only in major metros.
Building Resilient Supply Chains
Recognizing the volatility of global markets, India and Japan focused on creating more resilient supply chains. The discussions covered several strategic pillars essential for modern manufacturing:
- Critical Minerals: Securing the raw materials necessary for high-tech industries.
- Electric Mobility: Accelerating the shift toward green transport.
- Advanced Manufacturing: Integrating Japanese precision and technology with Indian scale.
Institutional Ties and Future Outlook
Governor Amakawa also pointed to JBIC's existing stake in the National Industrial Corridor Development Corporation (NICDC), underscoring the long-term commitment of Japanese financial institutions to India's industrial landscape.
The Ministry of Finance noted that both sides recognized a mutual opportunity to learn from each other's experiences. By leveraging institutional investment platforms and sectoral partnerships, India and Japan aim to strengthen their bilateral ties across the most strategic industries of the 21st century.