Help wanted, Japan

In a bid to facilitate Japanese firms' entry into the Indian market, Japan's foreign ministry has established a new division called the Japan-India Economic Affairs Division. This division, operational since April, will focus on addressing regulatory barriers and enhancing the business environment for Japanese companies operating in India. The unit comprises a staff of about 10 members, slated to commence full-fledged operations on August 3.

The establishment of this division comes in the wake of the "almost flat" growth in the number of Japanese companies in India since 2018, despite 1,434 such firms operating in the country in 2024. This stagnation is attributed to factors like legal system opacity, state-specific regulations, and insufficient infrastructure. The division aims to address these challenges through diplomatic efforts, including summit and ministerial meetings, and inter-governmental dialogue.

The Japanese government has set a target of attracting 10 trillion yen in private sector investments in India over a decade, and it has already planned investment programs worth about two trillion yen. The new division will work towards improving the investment climate through negotiations with the Indian government. Japan's foreign direct investment in India has seen a steady increase, reaching $2.48 billion in FY 2024-25 from $1.49 billion in FY 2021-22.

The cumulative Japanese investments in India from April 2000 to December 2024 have reached $43.28 billion, positioning India as the fifth most attractive source country for Japanese FDI. Japan and India's bilateral trade stood at $27.47 billion in FY 2025-26, with Japan ranking 10th in India's total trade and India 14th in Japan's.