‘Garbage is gold’ in Japan’s economic security game plan and India is its key partner

As part of the annual Raisina Dialogue, Firstpost’s IdeasPod hosted a compelling session on Japan’s strategic investments, featuring insights from Tadashi Maeda, Chairman of the Board at the Japan Bank for International Cooperation (JBIC) and Osamu Yamamoto, Chief Executive Officer at Unison Capital Management Pte. Ltd. The discussion, moderated by Jhanvi Tripathi, Associate Fellow at the Observer Research Foundation (ORF), delved into Japan’s economic security, rare earth investments and its evolving partnership with India.

A wake-up call: Japan’s response to China’s economic coercion

Reflecting on past economic threats, Tadashi Maeda highlighted a critical moment in Japan’s strategic decision-making. “Back in 2010, when I was a special advisor to the Cabinet, Chinese armed fishermen trespassed into the territorial waters near Senkaku Island in Okinawa Prefecture. When Japanese law enforcement arrested the captain, China retaliated with a ban on rare earth exports and trade restrictions,” he recalled.

This incident served as a wake-up call for Japan, leading to a significant shift in its supply chain strategy. “In 2011, Japan’s state-owned enterprise Jogmec, along with Sojitz Corporation, invested $250 million each to acquire shares in Lynas, an Australian rare earth mining and processing company. This ensured Japan secured 8,500 tonnes of rare earth elements annually for the next decade,” Maeda explained.

This move marked the beginning of Japan’s efforts to mitigate supply chain vulnerabilities in critical minerals.

Critical mineral security and the ‘garbage is gold’ approach

Japan’s approach to resource security has evolved significantly with a strong emphasis on alternative sources and sustainability. Yamamoto pointed out the importance of India-Japan cooperation in this regard. “The short answer is: to work with you, India,” he stated.

He elaborated on the concept of the ‘Sakura Economy’, which revolves around turning waste into wealth. “India has vast amounts of waste—e-waste, agricultural waste, urban waste. Given the global constraints on resources, garbage is gold. With the right technology, these materials can be converted into something meaningful. Japan’s private sector is equipped with 4R technologies—Recycle, Reduce, Reuse and Redesign,” Yamamoto said.

However, Japan’s domestic waste production is shrinking, which is good for the environment but poses challenges for its recycling industry. India, on the other hand, faces rapidly growing waste volumes.

“Your garbage is going to be four times larger in the next three years,” he pointed out, emphasising the urgency for India to harness Japanese technology for sustainable resource management.

Handling investment challenges in the Global South

When discussing investments in the Global South, regulatory barriers and environmental standards emerged as key concerns. However, Yamamoto took an optimistic stance: “At the end of the day, these obstacles are policy-level decisions. Fortunately, the Japan-India relationship is strong at the government-to-government (G2G) level, providing a predictable environment for private sector investments.”

Maeda provided insights from JBIC’s annual foreign direct investment (FDI) survey, which has been conducted for over 35 years. “Up until 2017, China was the top destination for FDI, with India ranking third or fourth. However, post-Covid-19, China’s ranking has dropped to sixth, while India has been number one for four consecutive years,” he said.

Despite this, the US remains the largest recipient of Japanese FDI, with India in second place. “India has immense potential but has yet to fully realise it due to regulatory complexities, municipal red tape and language barriers. However, with Prime Minister [Narendra] Modi ensuring policy continuity, I am confident India will be number one soon,” Maeda added.

Renewable energy and the future of India-Japan investments

Looking ahead, Japan’s investment priorities include renewable energy, hydrogen and ammonia technologies. “We are actively promoting FDI in these sectors,” Maeda emphasised.

A notable initiative is the Japan-India joint investment fund. “Japan deployed $300 million, matched by India’s National Investment and Infrastructure Fund (NIIF), creating a $600 million fund. This was originally requested by Prime Minister Modi and I responded a year later,” Maeda shared.

While the fund initially focussed on renewable energy and the circular economy, the next phase will see Japan and India jointly investing in third countries, particularly in the Global South.

Yamamoto echoed Maeda’s vision, outlining a strategic investment trajectory. “First, Japan and India must strengthen their partnership. Then, we can expand our joint solutions to regions like the Middle East and Africa,” he said.

This strategy reflects Japan’s commitment to fostering sustainable economic growth beyond its immediate bilateral relationships.

Indo-Pacific and the future of India-Japan ties

Japan’s broader vision for economic security aligns with the concept of a Free and Open Indo-Pacific. Quoting former Prime Minister Shinzo Abe’s 2007 address, Maeda reiterated Japan’s commitment: “A strong Japan is in India’s national interest and a strong India is in Japan’s national interest.”

Yamamoto summed up Japan’s investment strategy in one word: “Partnership. Like Chairman Maeda said, we need you, and you need us.”

Strengthening the India-Japan economic partnership

The discussion at Firstpost’s IdeasPod highlighted Japan’s strategic investments in India driven by economic security, sustainability and long-term cooperation. As both nations focus on global economic shifts, their partnership will play a crucial role in shaping the future of trade, technology and investment in the Indo-Pacific and beyond.

With India and Japan increasingly aligning their economic policies, the prospects for deeper collaboration have never been stronger.