Japan, facing a rapidly aging population and declining birth rate, is significantly increasing its investment in India to attract young, skilled workers to address critical labor shortages. This strategic move aims to revitalize the Japanese economy and foster stronger ties between the two nations.
The demographic crisis in Japan is becoming increasingly acute. The population has been shrinking for 16 consecutive years, dropping to 120.65 million in 2024 from a peak of 126.6 million in 2009. Nearly one in three Japanese citizens are 65 or older, while only six in ten are of working age (15-64). This has resulted in severe labor shortages across various sectors, including agriculture, nursing, manufacturing, and IT.
To counter this, Japan is actively seeking skilled foreign professionals, particularly from India, offering competitive salaries, job security, and streamlined visa policies. The focus is on attracting engineers, researchers, and STEM graduates, with companies providing long-term career growth opportunities. In 2023 alone, over 50,000 foreign professionals, including many Indians, were hired in Japan's IT sector.
Prime Minister Narendra Modi's recent visit to Japan underscored the growing importance of this partnership. During the visit, Japan pledged to invest 10 trillion yen (approximately $68 billion) in India over the next decade, a significant increase from the $2.7 billion annual investment in the 2010s. This investment aims to boost economic ties and cooperation in various sectors, including clean energy, technology, and defense.
A key component of this initiative is the facilitation of human resource exchanges. Both countries have agreed to increase exchanges of workers and students to half a million people over the next five years. This includes sending 50,000 skilled and semi-skilled Indian workers to Japan to fill labor shortages in specific sectors. These sectors include nursing care, aviation, accommodation, agriculture, and manufacturing.
To facilitate this, Japan established the "Specified Skilled Worker" (SSW) program in 2019 to welcome foreign specialists in specific fields. As of 2022, Japan had signed Memoranda of Cooperation with 15 countries, including India in 2021, under this program. The program allows individuals to stay for a maximum of five years, with possibilities for extension and permanent residency for skilled professionals.
The collaboration extends beyond just labor exchange. India and Japan are also focusing on joint research, commercialization, and value creation. They are promoting Japanese language education in India and encouraging cultural and educational exchanges to foster better understanding and stronger connections between the people.
This strategic partnership is expected to be mutually beneficial. Japan gains access to India's vast pool of young, talented workers, while India benefits from increased investment, technology transfer, and opportunities for its workforce. Modi has emphasized that "Japanese technology and Indian talent are a winning combination".
However, challenges remain. Japan needs to ensure effective integration of foreign residents, and address potential concerns about job competition and cultural integration. India needs to focus on skill development and ensure its workforce is adequately prepared to meet the demands of the Japanese labor market.
Despite these challenges, the deepening partnership between Japan and India holds immense potential. By leveraging India's demographic advantage and Japan's technological prowess, the two countries can address their respective challenges and drive economic growth, contributing to stability and prosperity in the region.
