Japan's business engagement with India is accelerating at a pace that now surpasses the growth of Japan-China business engagement, according to a new report from Japanese news platform Nippon.com, released on 5 October 2026. The findings underscore the growing strategic and commercial momentum between New Delhi and Tokyo, bolstered by Prime Minister Takaichi Sanae's recent visit to India.

Investment and Trade Milestones

The cumulative total of direct Japanese investment in India between April 2000 and March 2026 reached $48.1 billion, placing Japan in fifth position among India's largest foreign investors, according to the report. Japanese investment in 2025 alone stood at $3.74 billion, while bilateral trade crossed $25 billion in the same fiscal year.

The report noted that Japan continues to maintain a substantial trade surplus with India, but acknowledged that India is 'redoubling efforts to diversify its own export sectors — including seafood, textiles, and jewellery — and destinations.'

India Tops Japanese Business Confidence Rankings

India secured the top spot in the Japan Bank for International Cooperation (JBIC) Report on Overseas Business Operations by Japanese Companies in 2025 as the most promising business expansion destination over the next three years — for the fourth consecutive year. A separate survey found that over 75% of Japanese companies operating in India expect to turn a profit in the current financial year.

Defence, Energy and Critical Minerals

Beyond trade, Tokyo and New Delhi have committed to greater energy security cooperation and the strengthening of critical mineral supply chain resilience, the report said. Prime Minister Takaichi's visit was described as having 'turned out to be a meaningful one for the bilateral relationship,' with investment, defence cooperation, and technology partnerships all receiving fresh impetus.

Talent Pipeline: India's Engineers Fill Japan's Skills Gap

Japan's public and private sectors, grappling with a shortage of science and technology talent driven by a declining birthrate, have intensified efforts to recruit Indian engineers and technical experts through internships and corporate partnerships, the report said. 'As a nation facing a declining birthrate and a shortage of skilled workers, we must push forward with India in developing new markets, strengthening supply chains, and forging new people-to-people relations,' the report stated.

This comes amid a broader reorientation of Japanese corporate strategy — one that is increasingly treating India not merely as an emerging market but as a long-term production, talent, and innovation hub. How swiftly both governments can translate declared commitments into on-the-ground outcomes will determine whether this momentum is sustained.