What does Japan’s $42 billion investment in India mean for Indian sectors?

Japan’s investment in India: how much is it?

  • Japan to invest JPY 3.5 trillion which is Rs 3.2 lakh crore and plans to double the number of Japanese companies in India over the next five years.
  • The prime ministers of both countries held bilateral talks and signed six agreements in several areas, including cyber security and loan pacts for projects in connectivity, water supply and sewerage, healthcare, horticulture and biodiversity conservation in different states. They announced a partnership clean energy.

How are India’s trade relations with Japan?

  • Japan is the 5th largest investor in the Indian economy with cumulative FDI inflows of $ 36,366 mn during April 2020 and December 2021 which is around 7% of total FDI inflows.
  • India’s total trade with Japan has increased to $15.3 Bn in 2020–2021 with exports valued at $4.4 Bn and imports $10.9 Bn.
  • About 114 companies, including Daikin, Isuzu, Kobelco, Yamaha Music, and Hitachi Automotive have set up units in Japanese Industrial Townships (JITs) in India so far.

Which Indian sectors has Japan invested in so far?

  • As of 2022, Japan has invested approximately US$ 36.2 billion since 2000 in key sectors such as automobiles, electronics system design & manufacturing (ESDM), medical devices, consumer goods, textiles, food processing, and chemicals.
  • Japan has also been supporting infrastructure development in India, including a high-speed rail project.

Which sectors will benefit the most from Japanese investment?

  • Japan PM Kishida said the investment plan will bring huge benefits for several industries, from the development of urban infrastructure to green energy.
  • Sectors such as Information and Communications Technologies, Renewable Energy, Electric Vehicles, Drones, Robotics, and Textiles were highlighted as new opportunities for attracting Japanese investment into the Japanese Industrial Townships(JITs).
  • DPIIT and states presented the developed land and infrastructure available for Japanese investors in these townships, a statement by the commerce and industry ministry said.

Some Indian companies have received Japanese investment.

  1. Suzuki Motor will invest $1.3 billion(Rs10,445 cr) into Electric vehicles and battery production in India, the Japanese carmaker said, as it accelerates long-term plans to achieve carbon neutrality.
  2. Dixon technologies, a contract manufacturer in electronic goods has entered into a joint venture with a Japan-based rexxam company for the manufacturing of printed circuit boards ( PCBs) for air-conditioners for domestic and international markets.
  3. Indian railways finance corp (IRFC) is set to raise $ 1.1 billion through yen-denominated syndicated offshore loan, three people familiar with the matter.


What exactly are Japanese Industrial Townships?

JITs were set up in April 2015, JITs are designed to offer business environments in which Japanese companies can smoothly establish production sites and operate their businesses.

Japan is the only country that has dedicated country-focused industrial townships across India.

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