Indian Opportunities Spice Up Japanese Corporate Growth Strategies

India’s economy is in a strong macro “sweet spot” with:
- High GDP growth (projected ~7% annually from 2024–2028)
- Controlled inflation
- Narrowing budget deficit
- Robust banking and corporate balance sheets
India is set to be Asia’s fastest-growing economy this decade as China slows down.
Stock markets are expected to attract significant inflows due to stable policies and strong domestic equity demand.

India ranked #1 for Japanese manufacturing companies’ overseas business opportunities for the second year running (FY23 Japan Bank for International Cooperation survey).
Japanese FDI in India is growing across manufacturing, financial services, infrastructure, IT, healthcare, logistics, real estate, and more.
Trade ties remain modest but investments are deepening, driven by:
- Growth prospects in India’s local markets
- Large population and inexpensive labor
Japanese portfolio investment in Indian equities is also rising, with India topping Japan’s investments in less-developed countries as of end-2022.

Current Indian sales represent only about 0.3% of total sales for Japanese companies registered there — very small compared to Japan-China trade growth in the 2000s.
The number of Japanese firms reporting significant sales from India is expected to rise substantially over the next 20 years, mirroring China’s trajectory.
Key sectors attracting Japanese corporate expansion include automobiles, infrastructure, construction, materials, human resources, healthcare, agriculture, IT services, and finance.

Japanese companies expanding in India fall into three categories:
1. Firms citing India as a key growth driver in guidance updates but not yet disclosing Indian sales
2. Companies acquiring stakes in Indian businesses
3. Members of the Japan-India Association actively engaged in bilateral growth
Indian market development offers Japanese firms a strong complementary growth avenue due to India’s rapid economic expansion and rich talent pool.