'10x growth potential in 10 years': Ashoka University co-founder Ashish Dhawan on India-Japan ties, FDI | Exclusive

India has the potential to expand its economic engagement with Japan tenfold over the next decade, but realising that opportunity will depend on better implementation, stronger investment channels and deeper cooperation in manufacturing, technology and labour mobility, said Ashish Dhawan, Founding Chairperson, Board of Trustees of Ashoka University.

In an exclusive interview with LiveMint on the release of Ashoka University's India-Japan Economic Corridor report, Dhawan, one of the university's co-founders, said geopolitical shifts, particularly Japan’s efforts to reduce its dependence on China, present an opportunity for India to strengthen economic ties.

The report, being developed through Ashoka University's Iron Pillar Initiative in Global Learning, explores opportunities across manufacturing, technology, financial services and infrastructure.

“I think this is one of the most important strategic relationships in the next 20 years, because these are two of the top three economies in Asia. It's China first, then Japan, and India. We are natural partners. But despite that, the level of engagement is very low,” Dhawan told LiveMint.

“We are starting from a very low base, and we can only go up from here. I think there's a 10x potential in all of these in the next 10 years. It's not a 2x, it's a 10x potential,” he said.

Japanese capital offers a major opportunity

One of the biggest opportunities for India lies in attracting greater Japanese institutional investment.

Dhawan, who has also served on the board of trustees of the Gates Foundation since 2022, said Japan has accumulated substantial overseas investments over decades, but its allocation to India remains negligible.

He said India should aim for an allocation of at least 2-3%, based on measures such as market capitalisation, free float or GDP.

“With Japan, it takes longer to build trust. And so, I think we need to build these bridges with Japan. We need to make people aware,” Dhawan said.

He identified overseas investment flows as one of the biggest opportunities for India, given the scale of Japanese capital invested abroad.

Manufacturing ecosystem needs strengthening

Japanese foreign direct investment (FDI) is another area where India could make substantial gains. Dhawan said more than 1,400 Japanese companies have a presence in India, roughly one-twentieth of the number operating in China.

He said India must make it easier for Japanese mid-sized companies to establish and expand operations through better industrial infrastructure and business ecosystems.

“At our end, a lot of it boils down to implementation. I think while most governments want it to happen, we have not,” he said.

Dhawan said India has an opportunity to position itself as both a manufacturing destination and an alternative sourcing hub for Japanese companies seeking to diversify their supply chains.

China diversification creates openings

Japanese companies seeking to diversify supply chains may be willing to source from India even when production costs remain higher than in China.

Dhawan cited solar manufacturing as an example, saying Japanese firms were interested in sourcing from India as domestic manufacturing capacity expands.

“Even if the cost is 10-15% higher, which it is today, because we're still going up the economies of scale learning curve, they still want some sourcing from India, because they want a second alternative. They don't want to be dependent,” he said.

He added that Japanese companies in sectors such as automobiles, air-conditioning and consumer electronics face growing competition from Chinese brands, changing the rationale for maintaining a strong manufacturing presence in China.

Semiconductors and electronics offer scope

“India is doing well in electronics. Our PLI in electronics has done well. Now, PLI in components. If you look at electronic components, Japan does very well,” Dhawan said.

He said cooperation should extend beyond semiconductor fabrication plants and outsourced semiconductor assembly and testing facilities to the wider supply chain, including equipment, gases and chemicals sourced from Japan.

“Look at the value chain of semiconductor, the equipment, the gases, the chemicals, a number of them are sourced from Japan. So, as India now is looking to, with ISM 2.0, it's not just about the fabs and the OSATs, it's also about the supply chain,” he said.

Technology licensing and joint ventures could help India access Japanese expertise while strengthening domestic manufacturing capabilities.

Skilled labour and academic exchanges

Labour mobility is another largely untapped area between the two countries.

Dhawan said Indian students have established pathways into universities and labour markets in English-speaking countries, but Japan remains a less familiar destination.

“So Indians still have not found a student pathway into Japan,” he said, pointing to opportunities in English-language degree programmes and recruitment by Japanese companies such as Uniqlo and Rakuten.

He also highlighted the gap between the existing labour-migration framework and its implementation.

“It's a pity that Nepal sends five times more migrants for work to Japan than India does, even though our foreign minister, external affairs minister, Dr Jaishankar, signed a GTG agreement with Japan around labour migration,” he said.

“So the framework exists. The intent is there from both sides, but it hasn't been fulfilled. So I see a huge untapped opportunity on the labour migration side,” he added.

Dhawan said Ashoka University is interested in establishing a Japan centre to promote student and academic exchanges, policy research and monitoring of bilateral cooperation.

“I think it's good to make statements and have intent, but we need to now implement, whether it's student exchange, academic exchange, policy papers, tracking progress, etc.,” he said.

He said stronger institutional links could help bring businesses, universities and policymakers together to translate the strategic partnership into practical outcomes.

“We need platforms where people can come to make this happen, and that's what we want to create at Ashoka University,” Dhawan said.