Japan Launches New Division to Boost Investment in India's High-Growth Sectors

"Through the establishment of the Japan-India Economic Affairs Division, the Ministry of Foreign Affairs of Japan will further make public-private efforts to promote companies' expansion of business and investment from Japan to India and to deepen cooperation in the area of economic security with India," the ministry said in a statement.

"Given India's high rate of economic growth, the importance of economic cooperation in Japan-India relations is growing day by day," it said.

The new initiative is expected to support collaboration in high-growth sectors such as artificial intelligence, startups, and critical minerals, aligning with broader strategic priorities between the two countries.

The initiative reflects Tokyo's growing focus on India as a key economic and strategic partner amid shifting global supply chains and geopolitical alignments.

The move also complements the India-Japan goal of achieving 10 trillion yen (around $62.6 billion) in private sector investment in India by 2035, as agreed during the 2025 bilateral summit.

Cumulative Japanese FDI in India has reached about $43.2 billion since 2000, with key investments concentrated in sectors such as automobiles, electronics, telecommunications, chemicals, and financial services.

Surveys indicate that while Japanese manufacturers view India as a promising growth market, many remain cautious as they are not familiar with the rules and regulations in the country, which vary across states.

The new facilitation cell aims to address these concerns by providing institutional support and easing entry barriers for companies looking to expand in India.

Japanese FDI into India has been increasing, with inflows totalling $3.1 billion in 2023-24. Capital has primarily flowed into automobiles, electrical equipment, telecommunications, chemicals, financial services, and pharmaceuticals.

Dedicated Japan Industrial Townships (JITs) are also operating in India, such as those in Neemrana and Sri City, hosting over 100 Japanese companies.

This new office complements existing support mechanisms, such as the SME Facilitation Cell launched by the Indian Embassy in Tokyo and JETRO's support for startups.

This initiative is part of a larger, long-term strategic partnership discussed by Prime Minister Narendra Modi and then Japanese Prime Minister Shigeru Ishiba in August 2025 to strengthen security and economic ties between the two countries, particularly within the Quad framework.

- IANS