Japanese companies expand India footprint as businesses shift beyond manufacturing

Japanese companies are expanding and diversifying their presence in India as the country gains greater strategic importance in their global growth and capability-building plans, according to a report by Grant Thornton Bharat.

The report released on Thursday said the number of Japanese-owned businesses operating in India has risen to a record 1,463 in 2026, employing more than 459,000 people. The number of Japanese Global Capability Centres (GCCs) has also increased to 75, reflecting a growing shift towards technology, engineering, research and development, digital operations and shared services.

The report, titled Indo he Yokoso: Shaping the Future of Japanese Investments in India, said Japanese companies are increasingly looking beyond traditional manufacturing and using India as a base for engineering, R&D, digital operations and global business services.

Japanese FDI in India reaches $48 billion

Japanese cumulative foreign direct investment (FDI) in India has reached $48.14 billion, with inflows during FY2025-26 accounting for $3.75 billion. Bilateral merchandise trade between the two countries has also nearly doubled over the past decade to $27.48 billion in FY2025-26, the report said.

The India-Japan investment corridor recorded 51 deals worth $12.17 billion between 2021 and 2025. The year 2025 accounted for nearly two-thirds of the total deal value, indicating a sharp acceleration in investment activity.

Technology now accounts for 13% of Japanese companies operating in India, pointing to a gradual diversification of Japanese corporate presence beyond manufacturing into technology, consumer, business and financial services.

Japanese GCCs expand beyond traditional manufacturing

The report said Japanese GCCs are becoming an important part of this transition, with companies expanding technology, engineering, research, digital and business service functions in India to support both their domestic and global operations.

“Organisations are increasingly looking beyond individual investments and transactions towards building long-term capabilities, strategic partnerships and sustainable growth platforms,” said Alok Saigal, partner, international business, Grant Thornton Bharat.

India’s large market, talent pool and expanding industrial and digital ecosystem are increasingly complementing Japan’s strengths in long-term capital, advanced technology and manufacturing expertise, the report said.

The two countries are also expanding cooperation into strategic and emerging sectors, including semiconductors, artificial intelligence, digital infrastructure, critical minerals, clean energy and advanced manufacturing.

Mitsuhiro Takemura, partner at Grant Thornton Taiyo Advisors, said Japan’s strengths in advanced manufacturing, technology and quality excellence, combined with India’s scale, talent and digital capabilities, could create opportunities for innovation-led growth.

The report said India is emerging as a strategic destination for Japanese companies seeking new sources of growth, resilience and innovation. With the investment relationship expanding beyond manufacturing into technology and other strategic sectors, the India-Japan business corridor could see further growth in the coming years.