How Trade Wars Became India-Japan Partnership's Secret Weapon

Trade wars don't always create losers. Sometimes they forge unexpected winners. At the Nikkei Asia Forum in Bengaluru on Thursday, Geetanjali Vikram Kirloskar of the Confederation of Indian Industry made a striking observation: tariff wars have become a "tailwind" driving deeper India-Japan partnership and regional cooperation.

The Numbers Behind the Shift

The Trump administration's tariffs threaten $621 billion in trade with Asia, creating massive disruption across traditional supply chains. Yet this pressure is reshaping Asian economic relationships in surprising ways. While India's GDP growth slowed to 4.4% in 2025, Japanese corporate investment in India is accelerating.

Suzuki recently announced plans for a $550 million land purchase for its fifth Indian auto factory. Yamato Transport opened a massive logistics center in India. These aren't isolated moves—they represent a fundamental shift in how Japanese companies view India as both a manufacturing base and consumer market.

When Crisis Becomes Catalyst

Why is Kirloskar calling trade wars a "tailwind"? The answer lies in supply chain diversification. As companies reduce China dependence, India emerges as an attractive alternative offering both massive domestic demand and competitive production costs. For Japanese firms, this creates what Kirloskar describes as "enormous potential."

The partnership extends beyond manufacturing. India's world-leading mobile payment network is set to land in Japan, showcasing how digital innovation flows both ways. This isn't just about moving factories—it's about creating integrated economic ecosystems.

The Women Workers Wild Card

India's manufacturing push has an unexpected trump card: women workers. As the country leverages female labor to drive industrial growth, it's creating new dynamics in sectors from automotive to electronics. This demographic shift could give India-Japan partnerships unique advantages in labor-intensive industries.

Meanwhile, the Philippines' GDP growth dragged by corruption scandals and the US Fed's concerns about "elevated" inflation create additional opportunities for stable, growing partnerships like India-Japan to attract investment flows.

What Other Players Are Missing

While India and Japan deepen ties, other economies face different challenges. The US trade deficit with Asia continues expanding despite tariffs, suggesting that trade wars aren't achieving their intended effects. Consumer confidence in the US has plunged to an 11.5-year low, creating uncertainty about American market demand.

This context makes the India-Japan partnership even more valuable. Both countries offer political stability, growing consumer bases, and complementary strengths—India's digital innovation and demographic dividend, Japan's manufacturing expertise and capital.