Japan’s Ministry of Foreign Affairs will establish a new office aimed at strengthening economic cooperation with India and supporting Japanese companies looking to expand in the country, Japan’s Nikkei
Asia reported.
The initiative reflects Tokyo’s growing focus on India as a key economic and strategic partner amid shifting global supply chains and geopolitical alignments.
According to the report, the office will play an important role in encouraging reforms to address concerns raised by Japanese firms operating in India.
Companies have cited challenges such as varying state-level regulations, lack of transparency in legal processes, and a complex tax structure as factors that make investment decisions more difficult.
The development comes as India and Japan aim to significantly scale up economic engagement, including a goal of achieving ¥10 trillion (approximately $62.6 billion) in private-sector investment in India over the next decade.
REGULATORY COMPLEXITY CONTINUES TO IMPACT JAPANESE COMPANIES
Despite a strong interest in India’s growth story, Japanese companies have expanded slowly in the market.
Data from the Japanese Embassy cited by Nikkei Asia shows that 1,434 Japanese companies were operating in India in 2024, a figure that has remained largely unchanged since 2018.
In contrast, around 6,000 Japanese companies operate in Thailand and approximately 4,500 in Singapore, highlighting how India’s business environment continues to pose operational challenges.
Surveys conducted by the Japan Bank for International Cooperation have identified India as the most promising overseas destination for Japanese manufacturers for four consecutive years.
However, many companies believe the business environment presents structural challenges that are difficult for firms to resolve independently, the report said.
The newly created office is expected to facilitate dialogue between the two governments and help address barriers affecting investment decisions.
INDIA’S MARKET POTENTIAL DRIVES JAPAN’S STRATEGIC FOCUS
Japan’s prioritisation of India is driven by both economic opportunity and strategic considerations.
India’s large population and sustained high growth rate make it an attractive market for global companies.
According to the report, some projections indicate India’s nominal GDP could surpass Japan’s as early as 2026, which would make India the world’s fourth-largest economy.
India received an estimated $50 billion in foreign direct investment equity inflows in fiscal 2024, up 13 per cent from the previous year, according to Reserve Bank of India data cited by the report.
Singapore was the largest investor at about $15 billion, followed by Mauritius and the United States, while Japan ranked sixth with approximately $2.5 billion in investments.
INDIA-JAPAN STRATEGIC PARTNERSHIP SHAPES FUTURE COLLABORATION
The push for deeper economic ties builds on commitments made during the India-Japan Annual Summit held in August 2025.
According to news agency ANI, both countries agreed on eight broad areas of cooperation under their Special Strategic and Global Partnership, covering sectors such as supply chain resilience, semiconductors, critical minerals, clean energy, and emerging technologies.
The report mentioned that the two sides also emphasised cooperation in artificial intelligence, quantum technology, startups, space research, and healthcare innovation, alongside initiatives such as the Next Generation Mobility Partnership focused on high-speed rail, smart cities, and sustainable infrastructure.
Prime Minister Narendra Modi had congratulated Japanese Prime Minister Sanae Takaichi earlier this year following her coalition’s projected electoral victory, reaffirming that the India-Japan partnership plays an important role in promoting global peace, stability, and prosperity.
GEOPOLITICAL ALIGNMENT ADDS MOMENTUM TO ECONOMIC COOPERATION
Beyond economic benefits, Japan sees India as a crucial strategic partner in maintaining stability in the Indo-Pacific region.
Both countries, along with the United States and Australia, are members of the Quad grouping, which promotes a free and rules-based international order.
Nikkei Asia reported that strengthening economic ties is also seen as a way for Japan to maintain close relations with India as New Delhi continues its multi-aligned foreign policy approach.
