Business & Finance

Japanese firms expand investments in India amid domestic decline and China market risks

Corporate Japan is accelerating its expansion into India's consumer and financial sectors to diversify supply chains and seek long-term growth.

Updated Aug 31, 2026 · 23:19 UTC1 reports

The short version

Japanese companies are boosting foreign investment and commercial presence in India, driven by a shrinking domestic population in Japan and rising economic and geopolitical risks in China.
Major deals include Japanese banks acquiring substantial stakes in Indian financial institutions, alongside expanded presence by retail chains and major commitments in semiconductors and green energy.
Indian Commerce Minister Piyush Goyal recently led the country's largest-ever business delegation to Japan following $12.5 billion in corporate investment announcements made in July.
Despite growing momentum, investors face ongoing hurdles in India such as bureaucratic red tape, tax uncertainties, and complex supply chain ties to Chinese manufacturing.

At a summit in July, Japanese companies announced $12.5 billion in investments in India across roughly 120 agreements in sectors including green energy and semiconductors.[BBC News]
Indian Commerce Minister Piyush Goyal led India's largest-ever business delegation to Japan to strengthen trade and commercial ties.[BBC News]
MUFG Bank acquired a 20% stake in Indian shadow lender Shriram Finance for $4.4 billion last year, marking the largest foreign investment in India's financial sector to date.[BBC News]
Sumitomo Mitsui Banking Corporation became the largest shareholder in India's Yes Bank after securing a 24.22% stake.[BBC News]
More than 100 Japanese companies now operate global capability centers in India, making Japan the top Asia-Pacific contributor to these offshore innovation hubs according to Deloitte.[BBC News]
Convenience store chain Lawson plans to open 10,000 stores in India by 2050, beginning with locations in Mumbai.[BBC News]

It remains uncertain whether India can overcome persistent challenges for foreign investors, such as tax uncertainties, administrative red tape, and delays in environmental and land approvals.[BBC News]
Analysts note that existing integration with Chinese manufacturing networks could limit how fully Japanese businesses can decouple or shift operations to India without incurring significant costs.[BBC News]