Japanese companies plan to increase investment in India as they are looking for markets and want to reduce their reliance on China. India’s Commerce Minister Piyush Goyal recently led India’s business delegation to Japan. The visit aimed at improving trade and drawing investment between Japan and India.
Japanese companies are already becoming very famous in India, and brands like Uniqlo, Muji and Onitsuka Tiger are opening more stores. Furniture company Nitori has also entered the Indian market. Lawson, a major Japanese convenience store chain, plans to open thousands of stores in India over the coming years.
Japanese banks are also investing large amounts of money into India. MUFG Bank invested $4.4 billion to buy a 20% stake in Shriram Finance. SMBC also became the biggest shareholder in Yes Bank with a 24.22% stake. Japan is also a major contributor to India’s growing Global Capability Centre sector. More than 100 Japanese companies now have such centres in India. Suzuki-backed Next Bharat Ventures has also announced a $200 million fund to support businesses in the country.
During Japanese Prime Minister Sanae Takaichi’s visit to India in July, Japanese companies announced investments worth $12.5 billion through around 120 agreements. The projects include semiconductors, green energy and manufacturing. Japan is not completely moving away from China. Instead, Japanese companies are spreading their investments to reduce risks from supply chain problems and political tensions.
However, India still faces challenges such as complicated taxes, slow approvals and government delays. Experts say Delhi will need to make business easier if it wants Japanese investment to keep growing.
