Japan to set up India office to push investment, resolve business concerns: Report

Japan’s Ministry of Foreign Affairs will set up a dedicated office in India to strengthen economic cooperation and support Japanese companies operating in the country, Nikkei Asia reported. The office is also expected to help address regulatory and business concerns that have slowed Japanese investment in India.

According to the report, the proposed office will play a key role in encouraging reforms in response to concerns raised by Japanese firms. Among the issues flagged by companies are differing regulations across Indian states, a lack of transparency in legal processes and a complex tax structure, all of which have made investment decisions more difficult.

The move comes as India and Japan look to deepen economic ties, including a target of attracting ¥10 trillion, or about $62.6 billion, in private-sector investment into India over the next decade.

Despite continued interest in India, Japanese companies have expanded only gradually in the market. Data from the Japanese Embassy, cited by Nikkei Asia, showed 1,434 Japanese companies were operating in India in 2024, a number that has remained largely unchanged since 2018. By comparison, around 6,000 Japanese companies operate in Thailand and about 4,500 in Singapore.

The report said surveys by the Japan Bank for International Cooperation have identified India as the most promising overseas destination for Japanese manufacturers for four straight years. Even so, many firms believe the business environment poses structural challenges that cannot be resolved by companies on their own. The new office is expected to serve as a channel for dialogue between the two governments and help remove barriers affecting investment decisions.

Japan’s focus on India is being driven by both economic and strategic considerations. India’s large population and sustained high growth have made it an increasingly attractive market for global companies. The report noted that some projections indicate India’s nominal GDP could overtake Japan’s as early as 2026, making it the world’s fourth-largest economy.

India received an estimated $50 billion in foreign direct investment equity inflows in fiscal 2024, up 13% from the previous year, according to Reserve Bank of India

data cited in the report. Singapore was the largest investor at around $15 billion, followed by Mauritius and the United States, while Japan ranked sixth with investments of about $2.5 billion.

The report said the push for stronger economic engagement builds on commitments made during the India-Japan Annual Summit in August 2025. According to ANI, the two sides had agreed on eight broad areas of cooperation under their Special Strategic and Global Partnership, including supply chain resilience, semiconductors, critical minerals, clean energy and emerging technologies. Cooperation in artificial intelligence, quantum technology, startups, space research and healthcare innovation was also emphasised, along with the Next Generation Mobility Partnership focused on high-speed rail, smart cities and sustainable infrastructure.

The report added that Japan also sees India as an important strategic partner in the Indo-Pacific. Both countries are members of the Quad, along with the United States and Australia, and stronger economic ties are seen as a way for Tokyo to maintain close relations with New Delhi as India continues its multi-aligned foreign policy approach.