India and Japan Forge New Alliance on Economic Security—Is China the Target?

India and Japan’s Economic Security Pact: A Quiet Counterweight to China?

In a world where economic power is the new frontline of global rivalry, India and Japan are quietly building a formidable alliance. Following high-level talks in early 2026, the two nations have decided to “ramp up dialogue on economic security”—a phrase that sounds bureaucratic but carries seismic strategic weight .

This isn’t just about trade deals or investment flows. It’s about safeguarding semiconductors, securing rare earth minerals, shielding AI research from espionage, and ensuring that neither country becomes overly reliant on economies that may not share their democratic values. At the heart of this push? A shared concern over China’s growing economic coercion and technological dominance.

Table of Contents

• What Exactly Is “Economic Security”?
• Key Areas of India-Japan Economic Security Cooperation
• Why Now? The Geopolitical Triggers
• The Unspoken Elephant: Countering China’s Influence
• What This Means for Businesses and Investors
• Conclusion: A New Axis of Democratic Resilience

What Exactly Is “Economic Security”?

Economic security goes beyond GDP growth or fiscal stability. As defined by Japan’s National Security Strategy (2022), it encompasses:

• Protecting critical technologies (like AI, quantum computing, and biotech),
• Ensuring resilient supply chains for essential goods,
• Preventing intellectual property theft,
• Screening foreign investments in sensitive sectors,
• Securing access to raw materials like lithium, cobalt, and rare earths.

India has adopted a similar framework under its newly formed Office of the National Cyber Security Coordinator and the Department for Promotion of Industry and Internal Trade (DPIIT) [[External Link: https://dpiit.gov.in/]].

Key Areas of India-Japan Economic Security Cooperation

The enhanced India Japan economic security dialogue will focus on several concrete initiatives:

1. Semiconductor Supply Chains: Building alternative manufacturing hubs outside China, with Japan investing in India’s proposed semiconductor fabs.
2. Critical Minerals Partnership: Joint ventures to mine and process rare earth elements in third countries like Vietnam and Kazakhstan.
3. Technology Safeguards: Sharing best practices on export controls and R&D protection, modeled after Japan’s Economic Security Promotion Act.
4. Digital Infrastructure: Promoting Open RAN 5G networks and secure cloud systems as alternatives to Chinese tech giants.

Why Now? The Geopolitical Triggers

Several recent events have accelerated this partnership:

• China’s Export Controls: Beijing’s 2023 restrictions on gallium and germanium exports—a direct warning to the West—highlighted global supply chain fragility.
• US Indo-Pacific Strategy: Both India and Japan are key pillars of America’s vision for a “free and open Indo-Pacific,” which emphasizes economic resilience.
• Quad Alignment: As members of the Quad (with the US and Australia), India and Japan are aligning their economic security policies to present a united front.

The Unspoken Elephant: Countering China’s Influence

While neither government explicitly names China, the subtext is clear. China accounts for over 60% of global rare earth processing and dominates solar panel, battery, and telecom equipment markets. Over-reliance on Chinese supply chains poses both economic and national security risks.

By deepening their India Japan economic security ties, the two democracies aim to create a “China-plus-one” alternative—an integrated, trusted ecosystem for critical goods and technologies. This mirrors Japan’s “China+1” policy and India’s Production-Linked Incentive (PLI) scheme, which already offers subsidies to firms relocating from China.

What This Means for Businesses and Investors

This strategic shift opens significant opportunities:

• Manufacturers: Companies in electronics, EVs, and defense can benefit from joint India-Japan industrial parks and co-investment funds.
• Startups: Tech innovators in AI and clean energy may gain access to protected R&D grants and cross-border incubation programs.
• Investors: ESG-focused funds now have a clear geopolitical rationale to back India-Japan ventures as “secure” alternatives to China exposure.

For deeper insights into Indo-Pacific supply chains, see our analysis on [INTERNAL_LINK:indo-pacific-supply-chain-resilience].

Conclusion: A New Axis of Democratic Resilience

The decision by India and Japan to intensify their India Japan economic security dialogue marks more than a bilateral upgrade—it’s a foundational step toward a rules-based, democratic economic order in Asia. In an era where data is power and supply chains are strategic assets, this alliance could become the quiet backbone of regional stability. And while it may not make headlines like military drills, its long-term impact on global trade, technology, and security could be far greater.

Sources

• India, Japan decide to ramp up dialogue on economic security – Times of India
• Japan’s Economic Security Promotion Act – Cabinet Office, Government of Japan
• Department for Promotion of Industry and Internal Trade (DPIIT) – https://dpiit.gov.in/
• U.S. Department of State – Indo-Pacific Economic Framework: https://www.state.gov/indo-pacific-economic-framework/