A new energy axis: Japan PM’s India visit couldn't have been more timely

Japanese Prime Minister Sanae Takaichi will be on an official visit to New Delhi from July 1 to July 3 to attend the 16th India-Japan Annual Summit, at the invitation of Prime Minister Narendra Modi. This will be her first official visit to India since assuming office.

During the visit, Prime Minister Takaichi is expected to hold wide-ranging discussions with Prime Minister Modi on strengthening bilateral cooperation across defence and security, trade and investment, technology, clean energy, and regional and global issues of mutual interest. The summit is also likely to review progress in the India-Japan Special Strategic and Global Partnership and explore new areas of collaboration amid evolving geopolitical challenges in the Indo-Pacific region.

The India-Japan Annual Summit serves as the highest-level dialogue mechanism between the two countries and plays a key role in shaping the direction of their strategic partnership.

With the commencement of the US-Israel-Iran war in February, shockwaves were sent across the globe with a ripple effect across sectors. This triggered a global energy crisis that has intensified diplomatic manoeuvring. Amid attacks on energy infrastructure and the selective closure of the Strait of Hormuz, which carries about one-fifth of the world’s oil and gas, governments have been forced to implement emergency measures to secure fuel supplies and stabilise domestic markets. In this context, the Asian economies are among the hardest hit, as 84 per cent of crude and 83 per cent of LNG transiting the Strait of Hormuz serve Asian markets.

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India, China, Japan, and South Korea account for about 69 per cent of crude flows and a little over half of LNG flows. This has exposed Asia’s structural vulnerability to Middle Eastern supply shocks and underscored the strategic importance of maritime chokepoints such as the Strait of Hormuz. While India has faced acute shortages of liquefied petroleum gas (LPG) and crude oil as Gulf exports plummeted, Japan, which imports about 80 per cent of its energy, is exploring alternative options for sustainability and reliability. As both countries reflect a broader regional trend of prioritising national energy security, this article explores the potential for collaboration in the energy sector.

Japan’s Pitch for Unison

Japan’s energy policy is guided by principles of energy security, economic efficiency, environmental sustainability and safety. In April 2026, at the Asia Zero-Emission Community (AZEC) Plus, a Japan-hosted meeting that focused on disruptions in energy supplies in the wake of the West Asia crisis, it announced a new initiative called the Partnership on Wide Energy and Resources Resilience (POWERR) Asia. It aims to provide financial cooperation to Asian countries impacted by fuel supply shortages and supply chain disruptions. As a new framework for cooperation in emergency and structural responses with medium- to long-term perspectives, it has pledged $10 billion (₹83,000 crore approx.) to help Asian nations secure energy supplies, particularly crude oil. This move underscores the growing urgency of regional cooperation amid global energy disruptions. As geopolitical tensions continue to impact supply chains, coordinated efforts like this initiative will be crucial in maintaining stability and ensuring energy security across Asia.

In March 2026, Japan began releasing 80 million barrels of oil from its national reserves. The move was part of a broader International Energy Agency (IEA) initiative to coordinate the release of 400 million barrels globally to cushion markets from the war’s impact. This demonstrates the scale of the crisis and Tokyo’s determination to maintain economic stability without direct military involvement. This decision reflects Japan’s long-standing constitutional and political constraints on overseas military operations, as well as its preference for economic and diplomatic tools over force projection.

India and Japan Bet on the Energy Sector

India and Japan have collaborated in the energy sector, but the delivery has been visible on a limited scale. Since 1958, Japan has extended more than ¥1.5 billion in loans through Official Development Assistance to safeguard India’s energy availability. By fiscal year 2024-2025, its financing has supported 14.1 gigawatts of projects across solar, wind, hydro, cogeneration, storage and thermal capacity. This was a rise from around 9.3 GW, a decade earlier. The longstanding engagement reflects steady but gradual results. In a 2024 survey conducted by the Japan Bank for International Cooperation, India was reaffirmed as the most promising long-term destination for Japanese firms. Furthermore, during the Annual Summit held in Tokyo in August 2025, Japan pledged to invest ¥10 trillion in India over the next decade. This commitment doubles the previous 2022 target of ¥5 trillion and aims to strengthen cooperation in critical areas like semiconductors, AI, and green energy. This move sought to inject renewed political momentum.

Japanese technology, capital, and risk instruments are being steadily integrated into India’s clean energy landscape. For example, in the state of Odisha, Japan’s Mitsui OSK Lines (MOL) is partnering with ACME Group (a major renewable energy company in India) to build a green ammonia facility capable of producing 400,000 tonnes annually by 2030. These exports will be directed to the Japanese power and chemical sectors. Similarly, Sojitz and Suzuki are working with Indian Oil and local cooperatives to invest nearly ¥59.4 billion ($400 million) to scale biogas, embedding Japanese technology in rural India while boosting farmer incomes. Furthermore, while Toyota and Suzuki are expected to use India as a base for manufacturing hybrid and electric vehicles for export to Africa and Southeast Asia, Hitachi Energy has been selected to deliver a 950-km HVDC transmission system to transmit 6 GW of renewable energy in India. These initiatives reflect new project pipelines that are taking shape. Since 2000, Japanese companies have already averaged around ¥1 trillion annually in foreign direct investment and cumulative inflows. In the current scenario, it exceeds ¥6.3 trillion ($43 billion), making Japan India’s fifth-largest investor. There is a need to expand and deepen this sunrise sector to meet the urgency of the climate and energy transition challenge.

In August 2025, the Modi-Ishiba Joint Vision 2035 was unveiled in Tokyo. It is an ambitious 10-year roadmap for the India-Japan partnership, focusing on a 10 trillion yen (approx. $70 billion) investment target by Japan into India. It is deeply focused on the broader economic and security ties. In this context, energy is placed at the core, including next-generation mobility, emissions monitoring, hydrogen and ammonia, semiconductor resilience, and the Joint Crediting Mechanism, to enable emission-reduction projects in India.

As India advances on its ambitious path toward energy self-sufficiency, these collaborations reflect a reality but are not yet transformative in scale. There is a need to expand in scope and size and diversify into different sectors.

What More is Needed?

India-Japan cooperation is central to both energy transition and energy security in the Indo-Pacific region. The progress so far has been modest, but the challenge remains: building on existing frameworks, scaling them up, and aligning projects with the urgency of climate commitments and the realities of energy security.

Higher Japanese capital flow will require transparent risk-sharing mechanisms, deeper institutional reforms, and smoother regulatory pathways. Since the two countries are not starting from scratch, there is a need for steady transformation and incremental progress into scaled, system-wide change. This will include expanding renewable and grid infrastructure beyond pilot projects, ensuring finance flows faster and with fewer hurdles, while embedding the clean-energy transition. A stronger reliance on market-based instruments, such as carbon pricing, could be a cost-effective policy option to reduce emissions and foster innovation. Furthermore, there is a need to balance investments between proven renewables like solar, wind, and energy efficiency and evolving technologies such as hydrogen, carbon capture, and perovskite cells. Japan’s financing institutions and technology partnerships could also help integrate policy planning into just climate and energy transition projects.

The recently concluded India-Japan Economic Security Dialogue in New Delhi provides a conducive platform to advance industrial and technological collaboration across five sectors: critical minerals, semiconductors, ICT (including AI and telecom), clean energy, and pharmaceuticals. Nonetheless, policy uncertainty, legal complexity, underdeveloped infrastructure, and execution risks lead companies to see opportunities but remain cautious. Japan and India need to align ambition with delivery.

Way Forward

As geopolitics in the Indo-Pacific shifts, energy has become central to how India and Japan define their partnership. The crisis has accelerated a shift toward diversified energy strategies across Asia. There is a rising demand in South Asia, and Japan needs a secure alternative partnership. Combined with the shared urgency of decarbonisation, energy cooperation is becoming a test case for the limits of collective security coordination in Asia. Japan’s reliance on strategic reserves and India’s push for domestic natural gas adoption indicate recognition of the need for longer-term investments in alternative energy sources, regional supply networks, and strategic stockpiling mechanisms.

(The author is an Associate Fellow, India’s World Magazine. The views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)