India and Japan have forged a strategic semiconductor partnership through the India-Japan Joint Declaration on Economic Security Cooperation adopted at the 16th India-Japan Annual Summit in New Delhi in July 2026. This declaration places semiconductors alongside critical minerals, information and communication technology, clean energy and pharmaceuticals, acknowledging that national security increasingly depends on resilient factories, laboratories and technology supply chains. The partnership represents a shift from traditional industrial policy to economic statecraft, with Japan bringing technological depth and industrial discipline while India offers market scale, design talent and policy support. CG Semi's outsourced semiconductor assembly and test facility in Sanand, developed with technology support from Japan's Renesas Electronics, offers an early example of this collaboration, providing India with practical entry into the semiconductor value chain through packaging and testing capabilities.
In 1996, economist Rakesh Mohan submitted a groundbreaking India Infrastructure Report to the finance ministry that fundamentally redefined India's approach to infrastructure development. According to reports from Business Standard, the report estimated India's required infrastructure investments at ₹4.5 trillion for the next decade and called for private sector participation to increase from just 5% to 44%. This vision was realized during the National Democratic Alliance government under Prime Minister Atal Bihari Vajpayee, which launched major connectivity projects including the Golden Quadrilateral and allowed private entry into ports, with Mundra becoming India's first privately operated port.
The infrastructure reforms significantly boosted India's merchandise trade, which grew from ₹42 billion in 1990-91 to over ₹1.2 trillion in 2025-26. According to Business Standard, major ports handled more than 900 million tonnes of cargo in FY26, with the country now operating 13 major ports and over 200 minor and intermediate ports. Hemant Kumar Ruia from DP World noted that the 1991 reforms transformed India's economic trajectory, with the company establishing India's first private port partnership at Nhava Sheva in 1997. The semiconductor partnership builds on this foundation, with India offering fiscal support of up to 50% of eligible project costs often supplemented by state government incentives to reduce initial investment burdens for semiconductor projects that may take years to reach commercial maturity.
India's emerging semiconductor geography reflects three distinct regional strengths that can benefit from Japanese participation. The Dholera-Sanand corridor in Gujarat is positioned around fabrication, packaging and materials with supplier development as its next priority, while Tamil Nadu's automotive and electronics base gives it considerable potential in power semiconductors and industrial applications. Assam's Jagiroad cluster expands the sector's geographical reach and strengthens India's eastern economic engagement, though logistics and ecosystem development remain central challenges. Japanese companies are entering different parts of India's semiconductor landscape, with Tokyo Electron cooperating with Tata Electronics on equipment and technical services for the proposed fabrication facility at Dholera, and Fujifilm India exploring establishing a semiconductor-materials base in Gujarat. These developments give physical substance to economic-security diplomacy, connecting summit declarations with factories, laboratories, financing arrangements and technical partnerships.
Current reforms include the National Logistics Policy and the PM Gati Shakti National Master Plan, building on earlier liberalisation achievements. According to Business Standard, India aims to take 85% of its state-run port capacity to private players by 2030. The government has announced India Semiconductor Mission 2.0 in the Union Budget 2026-27, providing ₹1,000 crore alongside the broader ₹76,000-crore incentive framework introduced under the first phase. The second phase shifts attention towards equipment, advanced materials, indigenous intellectual property, research, training and supply-chain resilience. Industry experts believe there's significant opportunity for Indian investors as developers focus on capital recycling for new projects, with Umrigar noting that developers will only retain limited projects while recycling capital for new infrastructure development. The partnership requires creating an India-Japan Semiconductor Implementation Council led jointly by the Ministry of Electronics and Information Technology and Japan's Ministry of Economy, Trade and Industry, with quarterly reviews to track projects and resolve regulatory bottlenecks.
