Japanese Firms Eye India as China Risks Grow
Monday, 2026/09/07218 words3 minutes1006 reads
Japanese companies are investing in India across retail, finance, technology and manufacturing. Uniqlo and Muji are expanding, while Nitori has entered and Lawson plans a long-term store rollout. Banks are involved: MUFG bought 20% of Shriram Finance for $4.4bn, and SMBC became Yes Bank's largest shareholder with a 24.22% stake.
During Japanese Prime Minister Sanae Takaichi's July visit to Delhi, Japanese companies announced $12.5bn in investment through about 120 agreements, spanning semiconductors and green energy. More than 100 Japanese firms also operate global capability centres in India, performing work such as research, strategy and artificial intelligence development.
The business logic has several parts. Japan's population has declined, shrinking the outlook for domestic demand. India offers a growing consumer market and manufacturing ambitions. At the same time, geopolitical tensions, supply-chain disruption and weaker Japanese investment in China have encouraged firms to reduce concentration risk. Analysts describe this as a commercially driven reallocation of capital, rather than a government-led shift away from China.
That qualification matters. Japanese companies remain closely integrated with Chinese manufacturing networks, so they are not abandoning China en masse. India is also difficult to do business in, with tax uncertainty, bureaucratic red tape, and delays in land and environmental approvals. The scale of Japanese investment will depend on whether India can turn announced deals into projects.
