A New Chapter of Japanese Investment in India, Growing Interest in India from Japan

A New Chapter of Japanese Investment in India, Growing Interest in India from Japan

Tokyo — Japanese companies have shifted their perspective on India as a market, and their interest in doing business there has grown. A recent survey conducted by the Japan External Trade Organization (JETRO) revealed that 80% of participating companies are interested in expanding their business in India within the next two years. This interest has increased by 4.7% compared to last year.

One of the main reasons for this change is the declining confidence in China. Japanese companies' business outlook towards China has decreased by 21.7%, the lowest since 2007. Similarly, in Thailand, interest has decreased by 8.1% due to political instability, down from 34.1% in the previous year.

India has now emerged as the most attractive destination for Japanese businesses, ranking just behind Brazil, the UAE, Vietnam, South Korea, and South Africa. The survey, conducted between August and September 2024, included Japanese companies from 83 countries. Global factors, such as China's economic crisis, disruptions in the supply chain, and increased strategic risks, have led to this new interest in India. India and Japan have set a target of $42 billion (5 trillion yen) in investments by 2027, and progress towards this goal is underway.

Sixty-six percent of Japanese companies expect profits in 2024. The increasing demand in the Global South, particularly in countries like India, Brazil, Mexico, and Vietnam, is driving this profitability. However, Japanese companies have forecasted lower profits in China, Thailand, Germany, and the Netherlands, particularly in the automotive industry. Nevertheless, only 1% of companies plan to exit these markets, which indicates a sign of patience.

The growth in investment in India can be attributed to the country’s economic growth, rising population, and the emergence of the middle class. However, some concerns remain among Japanese investors due to political instability and unclear business practices of certain Indian companies. Despite these concerns, Japanese investment in India has increased in 2024 compared to the previous year.

In continuation of this investment growth, it is worth remembering Osamu Suzuki, who passed away on December 25, 2024, at the age of 94. Under his leadership, Suzuki Motor Corporation brought about revolutionary changes in India's automobile sector. Now, other Japanese companies must be encouraged to follow Suzuki's path and invest in India’s emerging sectors.