Modi’s Startup Diplomacy with Japan & China Amid Global Trade Shifts

Prime Minister Narendra Modi’s back-to-back visits to Japan and China this week come at a moment of heightened geopolitical tension. Just days after the United States imposed a sweeping 50% tariff on Indian exports—impacting over $48 billion in trade across textiles, gems, chemicals, and auto components—Modi’s itinerary sends a clear strategic signal.

On August 30, he toured Tokyo Electron Limited’s factory in Sendai, Japan, a global hub of semiconductor manufacturing. Within hours, he landed in China for the Shanghai Cooperation Organisation(SCO) Summit, engaging regional powers on trade, innovation, and strategic alignment.

This dual-stage itinerary—from Sendai’s semiconductor corridors to Shanghai’s innovation districts—underscores a bold narrative: India is positioning itself as both a global startup hub and a resilient economic force.

China’s Startup Ecosystem – Scale, Strategy & Statecraft

China has built its startup ecosystem through state-driven innovation and massive scale. According to the CIMK China Startup Ecosystem Report 2022, the country founded 44 million companies between 2010 and mid-2022 across its top 100 cities. Of these, 35,350 startups secured external financing, raising RMB 3,139 billion across 60,321 rounds.

The ecosystem remains highly concentrated:

• Beijing: 7,975 funded startups (22.6%)
• Guangdong: 6,419
• Shanghai: 5,829
• Zhejiang: 3,870
• Jiangsu: 3,795

Together, these five regions account for nearly 79% of all VC-backed startups, forming China’s core innovation belt.

What sets China apart is its ecosystem architecture. The state acts not only as a regulator but as an orchestrator. Policies like Made in China 2025, generous subsidies, and state-backed incubators align entrepreneurial growth with national priorities—AI, biotech, clean energy, and advanced manufacturing.

A conjoint analysis of 550 Chinese entrepreneurs revealed that funding size, government support, and financial infrastructure matter most. Founders with limited capital often relocate to regions with stronger financial backing—demonstrating the power of targeted policy.

India’s Startup Landscape – Democratic, Diverse & Disruptive

India’s startup story differs—it’s younger, decentralized, and inclusion-driven. The country now boasts 100+ unicorns, over 1,80,000 registered startups, a robust Digital Public Infrastructure (DPI), and a surge in women-led and rural startups.

According to Invest India, over 25,000 startups were added in 2024 alone, with Tier-2 and Tier-3 cities contributing nearly 40% of new registrations. While Bengaluru, Delhi-NCR, Mumbai, and Hyderabad lead, new hubs like Ahmedabad, Jaipur, and Kochi are fast emerging.

India’s policy architecture—DPIIT Startup India, Make in India, and the Semiconductor Mission—provides a supportive but decentralized framework. Private accelerators, incubators, and state-led initiatives drive much of the momentum.

Japan’s Precision – Semiconductor Lessons for India

Modi’s visit to Tokyo Electron symbolizes a turning point. Japan’s expertise in semiconductors and India’s ambition to build chip fabrication capacity could unlock collaboration in chip design, cleanroom manufacturing, and resilient supply chains—essential for India’s tech sovereignty.

This partnership could give India the precision manufacturing advantage it currently lacks, bridging a critical gap in its innovation chain.

Strategic Takeaways for India’s Startup Ecosystem

India can draw lessons from China’s scale and Japan’s precision. Five actionable insights stand out:

• Regional Innovation Clusters – Deepen state-level startup missions with sectoral focus—biotech in Hyderabad, agritech in Punjab, green tech in Gujarat.
• Blended Finance Models – Expand public-private VC funds and incubators, especially in Tier-2/3 cities and underserved sectors.
• Policy-Driven Bets – Align startup incentives with DPI, climate tech, and women-led entrepreneurship to build future-ready industries.
• Real-Time Ecosystem Mapping – Build dynamic dashboards to track funding flows, sectoral trends, and regional gaps, enabling policymakers and investors to act fast.
• Narrative Framing – Position India’s ecosystem not just as a business engine, but as a nationwide innovation movement—highlighting grassroots innovation, social impact, and startup resilience.

Diplomacy Meets Development – India’s Entrepreneurial Future

Prime Minister Modi’s Japan-China visit is not just about diplomacy—it’s a strategic pivot amid global economic headwinds. From Sendai’s chip labs to Shanghai’s innovation hubs, the journey underscores how ecosystem design, regional collaboration, and narrative clarity will define India’s entrepreneurial future.

In the face of punitive US tariffs and shifting trade alliances, India doesn’t need to mirror China’s model—it must chart its own path, rooted in democratic innovation and inclusive growth. As the world watches Modi engage with SCO leaders, India’s startup story is being rewritten—not only in boardrooms, but also in policy corridors, factory floors, and the dreams of its next generation of founders.

The question now is not whether India can rise—but how fast, how inclusively, and how boldly it chooses to lead.

❓ FAQ: Modi’s Startup Diplomacy with Japan & China

Q1: Why is Prime Minister Modi’s Japan-China visit important for India’s startups?
The visit highlights India’s push to strengthen its startup ecosystem, with lessons from Japan’s semiconductor expertise and China’s scale-driven innovation model. It also signals India’s intent to lead in global innovation despite trade challenges.

Q2: How do US tariffs affect India’s startup and trade strategy?
The new 50% US tariffs on $48B of Indian exports push India to diversify partnerships. Modi’s Asia tour shows a pivot toward technology, regional collaboration, and innovation-led growth.

Q3: What can India learn from China’s startup ecosystem?
India can adapt China’s focus on scale, regional innovation clusters, and government-backed financial infrastructure—while keeping its democratic, decentralized, and inclusive startup model.

Q4: How does Japan fit into India’s startup and tech ambitions?
Japan’s strength in semiconductors aligns with India’s Semiconductor Mission. Collaboration in chip design, cleanroom manufacturing, and resilient supply chains will boost India’s tech sovereignty.

Q5: What is India’s long-term startup strategy?
India is building a democratic, inclusive, and resilient innovation ecosystem. With over 100 unicorns and strong Tier-2/3 city participation, its focus is on blending policy, finance, and global collaboration to shape the next wave of entrepreneurship.