Japanese investment in India rose sharply (reported 51.1% in 2025-26), driven by confidence in India’s domestic-demand-led growth and resilience to U.S. tariffs, with a notable shift toward financial services rather than traditional manufacturing.

Japanese investment in ASEAN-10 declined significantly while Chinese investment there increased, oriented toward manufacturing and re-export/transshipment to the U.S. under relatively lower effective tariffs than direct Chinese exports.

The article links the India-focused Japanese investment trend to strategic continuity with the Free and Open Indo-Pacific framework and long-term efforts to deepen India–Japan economic ties.

In the post era of Japanese Yen appreciation, Japanese overseas investment was directed more towards low cost manufacturing bases, such as South East Asia and China. Trend witnessed a further twist, driven by US President Trump’s high reciprocal tariff. Japanese investment surged in India in 2025, despite slender growth in India’s exports. USA is the biggest destination for India’s export. Eventually, high reciprocal tariff arrested exports to USA. 

Unperturbed Japanese investors focused on domestic demand in India as a background for their investment, instead of low cost manufacturing and exports. India showcases a “New India” for its  strong resilience to  global economic turmoil and geopolitical tension erupted by Trump’s tariff weaponisation.  t registered one of the highest GDP growth in the world at 7.9 percent in 2025-26 and  is anticipated to register similar template of growth in the coming years. 

India’s high GDP growth was engineered by domestic........

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