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Mon, 31 Aug 2026

Mon, 31 Aug 2026 Japan Inc is betting big on India as China risks deepen

Japanese companies are doubling down on India amid a shrinking domestic market and rising risks in China.

* Japanese companies like Uniqlo, Muji, and Onitsuka Tiger are rapidly expanding in India, with many new players entering the market.
* Japan's commerce minister led a large business delegation to India last week to expand trade and investment ties between the two countries.
* Japanese banks are aggressively bidding for Indian financial assets, with MUFG Bank buying 20% of Shriram Finance for $4.4bn last year.
* More than 100 Japanese firms operate global capability centers (GCCs) in India, which are offshore innovation hubs that perform business-critical functions like R&D and AI development.
* Japan Inc is now the largest contributor to India's ecosystem of GCCs in the Asia Pacific.
* The relationship between India and Japan has become increasingly significant due to a permanent shrinking of the Japanese domestic market and investment opportunities elsewhere becoming less attractive.
* Japanese companies have announced $12.5bn in investments in India through 120 agreements, with a target to meet an even higher investment goal.
* Challenges to expanding the full scope of this relationship include India's engagement being more uneven but significant in key sectors, and economic interdependence constraining coordinated measures against China.
* Tax uncertainties, bureaucratic red tape, delays in land and environmental approvals, and contract enforcement are long-documented challenges for foreign investors in India.