Japan-India and the Eurasian Trade Compact Waiting to Happen

Prime Minister Narendra Modi's visit to Tokyo in August 2025 was presented primarily as another step in strengthening the security and strategic dimensions of the Japan-India partnership. Commentaries by various analysts highlighted the renewal of the joint vision for the next decade and the reaffirmation of an Indo-Pacific outlook.

Yet the real story lies in the economic commitments that accompanied the Indian Prime Minister's visit. These were, of course, not ordinary deliverables. Instead, they amounted to a pool of private capital, a structured framework for labor mobility, and a roadmap for technological collaboration.

The real question is whether Japan and India can take these instruments beyond the Indo-Pacific. They hope to use them to expand their economic and strategic presence across Central Asia and the Shanghai Cooperation Organization (SCO)region.

The Tokyo Deliverables and Potential Force Multipliers

At Tokyo, Japan pledged ¥10 trillion JPY (about $68 billion USD) in private investment into India over the next five years. Unlike concessional financing or official aid, this commitment reflected the readiness of Japanese firms and financiers to anchor themselves in India's expanding industrial and infrastructure ecosystem.

Alongside this, the leaders launched a mobility initiative that envisages the movement of half a million people over the same period. It includes 50,000 Indian skilled and semi-skilled workers coming to Japan.

This was coupled with agreements on semiconductors, clean energy, industrial competitiveness, and prefectural-level cooperation. Taken together, these outcomes created three important pillars: finance, labor, and technology. They can be mobilized not only for bilateral projects but also as the basis of a joint India-Japan economic strategy in Eurasia.

*On August 29, 2025, Prime Minister Shigeru Ishiba held a summit meeting with India's Prime Minister, Narendra Modi in Tokyo. (Courtesy of Cabinet Secretariat)*

A Eurasia Strategy

The need for such a strategy is obvious. China's trade with SCO members exceeded $500 billion in 2024, reflecting its dominance in Eurasian commerce. India, by contrast, remains a marginal player.

The Indian government itself has described trade with the five Central Asian republics as modest, and the figures bear this out. India's exports to Kazakhstan, for instance, were only $258 million in 2024, a fraction of the country's more than $440 billion in global merchandise exports.

The imbalance is not merely statistical. Central Asia is energy-rich, strategically placed between Europe and Asia, and keen to diversify its partnerships beyond China and Russia. Yet India has struggled to convert its political goodwill in the region into substantial economic outcomes. The gap, however, is structural: limited connectivity, insufficient financing, and inadequate industrial presence. This is precisely where Japan's capital and technology can serve as a force multiplier.

A Japan-India partnership in Central Asia rests on complementary strengths. Japan brings patient private capital, advanced manufacturing, and project management expertise. India contributes a large and competitive manufacturing base, a growing services sector, and the ability to provide affordable pharmaceuticals and agricultural processing.

Both countries share an interest in providing a transparent, credible alternative to China's Belt and Road model, which has created concerns in parts of the region over debt and dependence.

Modi's Tokyo visit set in place the financing and labor frameworks, and now the two sides have the instruments to act jointly.

What a Japan-India SCO Strategy Could Look Like

One possibility is to create a Japan-India Eurasia Investment Partnership that directs a portion of the pledged Japanese capital into projects in Central Asia. It would blend Japanese financing with Indian execution capacity. Initial projects could focus on logistics hubs, renewable energy ventures, and agro-processing plants. All of these would address the region's immediate economic needs while opening new markets for Japanese and Indian firms.

A second avenue is the establishment of joint industrial parks in countries like Uzbekistan or Kazakhstan. These could be by Indian pharmaceutical and IT firms, combined with Japanese capital goods manufacturers, to generate employment and exports.

Connectivity is another obvious area. India's investments in Chabahar Port and the International North-South Transport Corridor (INSTC) remain underleveraged. With Japanese technical and financial support, these can become reliable routes that connect Japan and India to Eurasian markets more efficiently.

Energy cooperation is equally promising. Central Asia's gas reserves and renewable potential could be tapped through joint ventures in Turkmenistan and Kazakhstan, diversifying India's energy imports and providing Japan alternative sources outside East Asia.

Finally, the human resource framework unveiled in Tokyo can be extended to Central Asia. This would create training pipelines for technicians and service providers, and reinforce the sustainability of joint projects.

*Indian Prime Minister Narendra Modi speaks at a joint press conference following the Japan-India summit on August 29, 2025. (Courtesy of Cabinet Secretariat)*

Overcoming the Obstacles

The obstacles, however, could also cause an impediment. For instance, the infrastructure gaps, especially in Afghanistan and Iran, complicate overland connectivity, which is a major obstacle. Indian exporters will also need to adapt products to local market demand rather than rely on global templates. Yet these challenges are not insurmountable.

Transparent project design, multilateral co-financing, and a focus on commercially viable corridors can reduce political and economic risk. Most importantly, starting with sectors of clear comparative advantage, such as pharmaceuticals, IT services, and agricultural processing, would allow quick wins and create momentum.

The Tokyo summit has thus provided India and Japan with a rare combination: billions in private capital, a structured labor mobility plan, and a framework for industrial and technological cooperation. If deployed strategically, these instruments can enable the two countries to enlarge their footprint in Central Asia and the SCO, regions that are central to both India's continental outreach and Japan's search for diversified markets and resources.

Due Vigilance

That said, any serious initiative in Central Asia will, of course, threaten Russian and Chinese interests. Therefore, it will need careful political handling. The way forward lies in moving beyond bilateral projects and treating Eurasia as a shared economic theater.

A credible Japan-India presence in SCO member countries would not only rebalance China's overwhelming trade imperatives but also provide the region with genuine alternatives. For Tokyo and New Delhi, it would mean translating summit declarations into a Eurasian trade compact that delivers concrete benefits ー and positions them as long-term stakeholders in the heart of the continent.