Indo he Yokoso: India’s rising strategic importance reshapes Japan’s investment playbook

Japanese companies are deepening and diversifying their presence in India, with the number of Japanese-owned businesses in the country rising to a record 1,463 in 2026, while the number of Japanese Global Capability Centres (GCCs) has increased to 75 according to Grant Thornton Bharat’s latest report, Indo he Yokoso: Shaping the Future of Japanese Investments in India. The findings reflect India's growing importance in Japanese companies' global growth, innovation and capability-building strategies. 

The report highlights a significant evolution in Japan's India strategy, with companies increasingly leveraging India not only for manufacturing and market expansion, but also as a hub for engineering, research and development, digital operations and shared services. The partnership is expanding into emerging areas such as semiconductors, artificial intelligence, digital infrastructure, critical minerals, clean energy and advanced manufacturing, supported by growing cooperation between the two countries across strategic sectors. India's scale, talent pool and rapidly developing industrial and digital ecosystem complement Japan's strengths in long-term capital, advanced technologies and manufacturing expertise.

The report also highlights the growing role of Japanese Global Capability Centres (GCCs) in India, as companies expand technology, engineering, research, digital and business services functions to support both Indian and global operations. This shift reflects India's emergence as a strategic capability and innovation hub within Japanese companies' global operating models.

Key findings:

• Japanese cumulative FDI in India has reached USD 48.14 billion, with FY2025-26 inflows accounting for USD 3.75 billion.
• Bilateral merchandise trade has roughly doubled over the past decade, reaching USD 27.48 billion in FY2025-26, with significant room for further expansion.
• The India-Japan corridor recorded 51 deals worth USD 12.17 billion between 2021 and 2025, with 2025 contributing nearly two-thirds of the total deal value.
• Japan's corporate presence in India has expanded to 1,463 companies employing over 459,000 people, with growing representation beyond manufacturing across technology, consumer, business and financial services.
• Technology now accounts for 13% of Japanese companies in India, reflecting diversification beyond traditional manufacturing sectors.

Through our work with Japanese companies and stakeholders across the corridor, we are witnessing a clear evolution in the India-Japan business relationship. Organizations are increasingly looking beyond individual investments and transactions towards building long-term capabilities, strategic partnerships and sustainable growth platforms. As India’s role in global value chains continues to expand, we believe the opportunities for deeper collaboration between India and Japan, across manufacturing, technology, services and innovation, will only grow stronger in the years ahead.

Alok Saigal
Partner, International Business, Grant Thornton Bharat

India and Japan bring highly complementary strengths to the global economy. Japan’s leadership in advanced manufacturing, technology and quality excellence, combined with India’s scale, talent and digital capabilities, creates significant opportunities for innovation-led growth. As businesses navigate an increasingly dynamic global environment, collaboration between our two countries will continue to unlock new avenues for investment, capability development and cross-border value creation.

Mitsuhiro
Takemura Partner, Grant Thornton Taiyo Advisors Co., Ltd.

As Japanese companies look to build new engines of growth, resilience and innovation, India is emerging as a strategic destination for investment, technology and capability building. With cooperation expanding across sectors such as AI, semiconductors, clean energy and advanced manufacturing, the India-Japan partnership is well positioned for its next phase of sustained growth.