This digital century has opened manifold opportunities for sustainable and inclusive development through next-generation technologies. Artificial Intelligence (AI) is one such tech, paving the way for new co-policies for countries to address their long pending challenges domestically as well as globally. The power of AI is transforming the India-Japan bilateral relationship, resulting in a revamped feasible approach towards technological advancements addressing national priorities. The research paper will identify the natural areas of AI cooperation between India & Japan to understand and codify policy requirements for the countries. After the launch of India-Japan Digital Partnership, both countries are diversifying their AI cooperation and expanding their horizons in many human centric avenues. This paper will descriptively analyse proposed AI policies of both countries, to understand the basic building blocks for future partnership materializing required outcomes. The paper will use mixed methods of research, comprising B2B statistical analysis as well. It will also delve into the policy obstructions that require consultative mechanisms among the countries. The AI policy components and their governance structures will be critically analysed for assessment of key headways leveraging complementary strengths of the countries.