India’s commerce minister Piyush Goyal led the country’s largest-ever business delegation to Japan last week in a bid to expand trade and investment ties between the two countries.
Japanese consumer brands such as Uniqlo and Muji are now ubiquitous across Indian metros, with the premium sneaker brand Onitsuka Tiger rapidly expanding the same. Niche players like furniture maker Nitori have entered recently, and the convenience‑store chain Lawson plans to open 10,000 outlets by 2050, beginning in Mumbai.
The expanding presence is not limited to retail. In India’s financial landscape, Japan’s MUFG Bank acquired a 20 % stake in Shriram Finance for $4.4 bn—a record foreign investment. Additionally, Sumitomo Mitsui Banking Corporation became the largest shareholder in Yes Bank with a 24.22 % stake.
Japan Inc. now dominates India’s global capability‑centre ecosystem, with over a hundred Japanese firms operating offshore innovation hubs that undertake R&D, AI development and corporate strategy.
Japanese companies are seeking growth in India as domestic demand shrinks and China’s attractiveness declines. According to founder Vipul Nath Jindal of Next Bharat Ventures, the local Indian market’s shrinkage forces Japanese firms to look overseas.
A landmark summit in July, during Prime Minister Sanae Takaichi’s inaugural visit to Delhi, announced $12.5 bn in Japanese investment through about 120 agreements, spanning semiconductors to green energy.
Japan’s small and medium‑sized enterprises (SMEs) are also eyeing India. Hamamatsu City, home to giants like Suzuki, Honda and Yamaha, has set up the Hamamatsu India Committee to explore SME expansion.
Despite the shift, Japanese firms are not abandoning China entirely. They are simply reducing concentration risk across diverse supply chains to mitigate geopolitical disruptions.
India acts as a hedge against China‑related risks and aligns with Tokyo’s economic security priorities, strengthening the bilateral relationship beyond high‑level diplomacy.
Nevertheless, challenges remain. India’s bureaucratic red tape, land‑approval delays and tax uncertainties complicate foreign investment flows, as highlighted by an ex‑Japanese minister’s critique of the bullet‑train project.
Chinese state media quickly seized on the friction to flag India’s enforcement gaps, highlighting the need for Delhi to bolster contractual guarantees and regulatory clarity.
In short, Japan’s intensive investment in India reflects strategic diversification and mutual growth prospects, but sustained momentum will require streamlined regulatory frameworks and stronger bilateral coordination.
