Following the announcement, at the time of writing, Japan’s benchmark Nikkei 225 surged 579.05 points, or 1.35%, to 43,597.80 on Monday.

Why is this pertinent for India?

Recently, Ishiba had met India's Prime Minister Narendra Modi during the latter’s two-day Tokyo visit. During the visit, India and Japan adopted a 10-year roadmap to deepen India-Japan Special Strategic and Global Partnership. This included Japan committing to double its investment in India to JPY 10 trillion (around ₹5.94 lakh crore) during the next decade and expanding bilateral trade under India-Japan Comprehensive Economic Cooperation Agreement (CEPA).

The deal also included promoting industrial cooperation through Make in India and enhancing financial, SME, agri-business and ICT collaboration between the two nations.

The two countries promised to work jointly on high-speed rail, metro systems, smart cities, clean fuel-based transport, cold-chain logistics and disaster-resilient infrastructure.

The countries also adopted an Action Plan to exchange over 5 lakh personnel over five years, expanding language and training exchange, boosting tourism, and strengthening cultural ties.

Ishiba’s resignation may have implications for the implementation of these commitments.

Why did Ishiba resign now?

Ishiba assumed the country’s leadership in October 2024 and had been resisting demands from right-wing rivals within the ruling LDP. During his televised announcement, Ishiba stated that the decision comes only now because the negotiations with the U.S. had reached a conclusion.

The India-Japan deal, and the reduction of U.S. tariffs were among the key wins for Ishiba. U.S. president Donald Trump has recently reduced tariffs on Japanese exports from 25% to 15%.

This decision reportedly was taken to avoid the LDP from passing a no-confidence vote, pushing for an early leadership election. According to a Reuters report, the move followed a meeting with Agriculture Minister Shinjiro Koizumi and former Prime Minister Yoshihide Suga, who reportedly urged him to step down.

Ishiba’s government had faced critical losses in the parliament (National Diet), particularly with the July’s upper house (House of Councillors) election with the ruling coalition losing its majority in both houses of the Diet.

What happens next?

The LDP is now expected to schedule a presidential election in early October. Reuters report states that potential candidates for prime ministership include Koizumi, former Economic Security Minister Sanae Takaichi, and Chief Cabinet Secretary Yoshimasa Hayashi.

shigeru ishiba

Japan’s PM Shigeru Ishiba resigns; here’s why India is paying close attention