Japan has emerged as India’s largest source of foreign direct investment (FDI) during the first quarter of the financial year 2026–27, with inflows reaching $5.71 billion between April and June 2026. The investment exceeded the $3.74 billion received from Japan during the entire 2025–26 financial year, highlighting the growing economic ties between the two countries.
Japanese investments accounted for nearly 29% of India’s total equity FDI inflows of $19.81 billion during the quarter. The figure reflects a significant increase in Japanese capital entering the Indian market, particularly through large financial-sector transactions and acquisitions.
Financial Deals Drive Investment
A major contributor was MUFG Bank’s acquisition of a 20% stake in Shriram Finance for ₹39,618 crore, or around $4.4 billion. The transaction was described as the largest cross-border investment in India’s financial services sector. Japanese financial institutions are also expanding their presence in banking, lending, insurance and investment services.
Beyond financial services, Japanese companies continue to invest in automotive manufacturing, batteries, industrial production, renewable energy, logistics and technology. India is also seeking greater Japanese participation in semiconductors, critical minerals, railways and defence.
Singapore Ranks Second
Singapore was the second-largest source of FDI in India during the April–June quarter, with $5.22 billion in inflows. Mauritius followed with approximately $2.4 billion, while the Netherlands contributed $1.38 billion and the United States $1.35 billion.
Overall equity FDI into India rose around 6% year-on-year to $19.81 billion in the first quarter of FY27. Total FDI, including reinvested earnings and other capital, increased approximately 22% to $30.65 billion.
India Seeks Long-Term Japanese Investment
Japan has set a target of investing 10 trillion yen in India over a decade. To support Japanese businesses, India has established 12 Japanese industrial townships across nine states, offering dedicated infrastructure and investment facilitation services.
The latest investment figures underline Japan’s growing role in India’s financial and industrial sectors, as companies seek new markets, diversify supply chains and expand their presence in the country.
