When Prime Minister Narendra Modi met his Japanese counterpart Shigeru Ishiba in Tokyo recently, the announcements went far beyond routine diplomacy. At the heart of their discussions was a sweeping ten-year blueprint under which Japan committed to investing 10 trillion yen (nearly $68 billion) in India. While the plan spans semiconductors, artificial intelligence, and digital technologies, the energy dimension of this partnership is particularly significant, marking a turning point for India’s clean transition story.
For the first time, India signed a carbon trading arrangement under the Joint Crediting Mechanism with Japan. This allows both nations to collaborate on projects that reduce emissions and jointly account for the credits. In practical terms, it provides Indian industry access to Japanese capital and technology, while offering Japan a credible way to offset emissions as it strives to meet its own climate targets. This comes at a crucial juncture, as India races to meet its commitments of 500 GW of renewable capacity by 2030 and aims for net-zero by 2070.
Beyond carbon credits, the partnership is extending to advanced clean fuels. Projects such as the L&T–ITOCHU plan to develop green ammonia in Gujarat show how Indo-Japanese cooperation is moving from boardrooms to the ground. Green ammonia, seen as a potential substitute for fossil fuels in shipping and fertiliser, can emerge as a new export commodity from India to energy-hungry Japan. Simultaneously, Tata Power-DDL’s tie-up with Japanese partners to deploy micro-substation technology in Delhi underscores how this collaboration is beginning to shape urban infrastructure as well.
Image from DD News
The pact also reflects a broader strategic realignment. Japan has long been India’s most trusted partner in infrastructure, having funded the Delhi Metro and the Mumbai-Ahmedabad bullet train. But the new focus on energy, critical minerals and technology security signals that both countries are looking at deeper integration of supply chains. In a world where China dominates the lithium-ion cell market and controls key mineral flows, the Indo-Japanese understanding on batteries, critical minerals and renewable energy equipment becomes more than an economic pact—it is a hedge against strategic vulnerabilities.
There is also a domestic policy dimension. India has pushed for localisation under Make in India and the PLI schemes, but advanced technologies in batteries and semiconductors demand deep pockets and technological know-how. Japan brings both, along with patient capital and global credibility. For Indian companies, this offers a chance to plug into global markets while reducing dependence on volatile imports. For Japan, a stronger India not only secures supply chains but also ensures a stable partner in Asia at a time when energy security is under strain worldwide.
The larger impact of this energy pact will be felt in three ways. First, it will accelerate India’s energy transition by opening up new streams of technology and finance. Second, it will strengthen the resilience of supply chains in critical sectors like batteries and green hydrogen. And third, it will add weight to the strategic partnership between the two democracies, giving fresh momentum to regional platforms like the Quad.
What will matter now is execution. India has historically struggled with bureaucratic delays and policy uncertainty, and investors have often flagged land acquisition and regulatory hurdles as deterrents. To make this decade-defining deal deliver, both sides will have to ensure speed, transparency and accountability in implementation. If India can align its domestic reform agenda with Japanese investment appetite, this partnership could become a model for other Asian economies seeking to balance growth with sustainability.
The India–Japan energy pact is therefore not just a business transaction or a diplomatic handshake. It is a recognition that the energy transition is inseparable from questions of technology, supply chains, and geopolitics. For India, it offers a pathway to accelerate green growth while securing its place in the new global energy order. For Japan, it ensures a reliable partner in Asia’s most dynamic economy. The next decade will test how far this vision can be translated into tangible results—but the direction of travel is clear: a deeper, greener, and more strategic partnership.
