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

India has the potential to expand its economic engagement with Japan tenfold over the next decade, but realizing this opportunity will depend on better implementation, stronger investment channels and deeper cooperation in manufacturing, technology and labor mobility, said Ashish Dhawan, founding chairman of Ashoka University’s board of trustees.

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.

Developed through Ashoka University’s Iron Pillar Initiative in Global Learning, the report 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 they are two of the three largest economies in Asia. First it is China, then Japan and India. We are natural partners. But despite that, the level of engagement is very low,” Dhawan told LiveMint.

“We’re starting from a very low base and can only go up from there. I think all of these options have 10x potential over the next 10 years. It’s not 2x, it’s 10x potential,” he said.

Japanese capital offers a great opportunity

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

Dhawan, who has also served on the board of the Gates Foundation since 2022, said Japan has accumulated significant foreign investment over the 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 capitalization, free trade or GDP.

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

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

The manufacturing ecosystem needs strengthening

Japan’s foreign direct investment (FDI) is another area where India could make significant gains. Dhawan said there are more than 1,400 Japanese companies operating in India, roughly one-twentieth of the number operating in China.

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

“On our end, a lot of it boils down to implementation. I think while most governments want it to happen, we haven’t,” he said.

Dhawan said India has an opportunity to become both a manufacturing destination and an alternative source for Japanese companies seeking to diversify their supply chains.

China’s diversification creates opportunities

Japanese companies seeking to diversify their supply chains may be willing to buy from India, even though production costs remain higher than in China.

Citing solar manufacturing as an example, Dhawan said Japanese firms are interested in supplies from India as domestic manufacturing capacity expands.

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

He added that Japanese companies in industries such as automobiles, air conditioners and consumer electronics are facing increasing competition from Chinese brands, changing the rationale for maintaining a strong manufacturing presence in China.

Offer of semiconductors and electronics

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

He said cooperation should expand beyond semiconductor manufacturing 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 semiconductors, equipment, gases, chemicals, a lot of them are from Japan. So, as India is trying now, with ISM 2.0, it’s not just about fabs and OSAT, it’s also about the supply chain,” he said.

Technology licensing and joint ventures could help India tap into Japanese expertise while boosting domestic manufacturing capacity.

Skilled workforce and academic exchanges

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

Dhawan said Indian students have carved out pathways to universities and job markets in English-speaking countries, but Japan remains a lesser-known destination.

“So Indians still haven’t found their way as students to Japan,” he said, pointing to opportunities in English degree programs and recruitment by Japanese companies such as Uniqlo and Rakuten.

He also highlighted the gap between the existing framework for labor migration and its implementation.

“It is a shame that Nepal sends five times more migrants to Japan for work than India, even though our Foreign Minister, External Affairs Minister Dr. Jaishankar has signed the GTG agreement with Japan on labor migration,” he said.

“So the framework exists. The intention is there from both sides, but it has not been fulfilled. So I see a huge untapped opportunity on the labor migration side,” he added.

Dhawan said that Ashoka University is interested in setting up a Japan center to promote student and academic exchanges, policy research and monitoring of bilateral cooperation.

“I think it’s good to make a statement and have an intention, but we need to implement it now, whether it’s student exchanges, academic exchanges, policy documents, progress monitoring, etc.,” he said.

He said stronger institutional links could help bring businesses, universities and policymakers closer together and translate strategic partnerships into practical results.

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