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New Delhi
Japan emerged as India’s largest source of foreign direct investment (FDI) in the April-June quarter of 2026-27, with inflows of $5.71 billion, surpassing the $3.74 billion received from the country during the entire previous financial year, according to government data. The surge was largely driven by major financial-sector transactions and acquisitions, reflecting growing Japanese interest in India’s financial services, technology and manufacturing sectors.
Japan’s investment accounted for nearly 29% of India’s total equity FDI inflows of $19.81 billion during the quarter.
A major contributor was Japan’s MUFG Bank acquiring a 20% stake in Shriram Finance for Rs 39,618 crore, or approximately $4.4 billion, in April. The transaction marked one of the largest cross-border investments in India’s financial services sector.
Singapore ranked second among India’s FDI sources during the quarter, with investments of $5.22 billion, followed by Mauritius at around $2.4 billion.
Industry experts said Japanese companies were increasingly diversifying their supply chains amid geopolitical uncertainty, rising manufacturing costs and tariff risks. India’s large consumer market, expanding industrial capabilities and technology ecosystem are making it an attractive destination for long-term investment.
Financial services, digital infrastructure, automotive manufacturing, batteries, renewable energy and logistics are among the sectors drawing Japanese interest. Semiconductors, critical minerals, railways and defence could also offer opportunities for future cooperation.
India has established 12 Japanese industrial townships across nine states to facilitate investment by Japanese companies. These provide dedicated infrastructure and assistance to investors.
Japan has also set a target of investing 10 trillion yen in India over a decade, underlining the potential for deeper economic cooperation between the two countries.