Japan has created a dedicated division in its foreign ministry to help small and medium-sized companies and startups enter the Indian market and expand their investments. The new unit will also work with the Indian government to address regulatory issues that affect Japanese businesses. The move reflects Japan’s growing focus on strengthening economic ties with India and supporting companies looking for new business opportunities.

The Japan-India Economic Affairs Division was established in April under the Southwest Asia Division of Japan’s foreign ministry. The division will begin full-fledged operations on August 3, when its head officially takes charge along with a team of around 10 staff members. According to Jiji Press, the unit will focus on improving business conditions for Japanese companies operating in India and those planning to enter the country.

The decision comes at a time when the number of Japanese companies in India has remained largely unchanged for several years. There were 1,434 Japanese companies operating in India in 2024. The number has stayed almost the same since it crossed 1,400 in 2018. The report said this trend reflects challenges such as the “opacity of legal systems, varying regulations across states and insufficient infrastructure”.

The new division plans to raise these concerns during summit-level and ministerial meetings between India and Japan. It will also use official government discussions to encourage the removal of regulatory barriers that affect Japanese businesses. A foreign ministry source told Jiji, “We want to solve problems facing companies through diplomacy.”

Apart from helping companies already operating in India, the division will also focus on businesses that have not yet entered the Indian market. It will study the regulations and challenges faced by Japanese companies that do not have business bases or sales networks in India. The unit will then work to improve the overall business environment through discussions and negotiations with the Indian government.

Japan has been increasing its economic engagement with India in recent years. Last year, the Japanese government announced a target of achieving 10 trillion yen in private sector investments in India over the next 10 years. Investment programmes worth around two trillion yen have already been approved, showing steady progress toward that goal.

When the Japan-India Economic Affairs Division was created in April, Japan’s foreign ministry said the new unit would strengthen “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”. The ministry also noted that India’s strong economic growth has increased the importance of bilateral economic cooperation.

The two countries also reaffirmed their commitment to closer economic ties during a summit held last month. Prime Minister Narendra Modi and his Japanese counterpart, Sanae Takaichi, expressed their intention to support economic growth in both countries through stronger cooperation. Their discussions highlighted the shared interest in expanding trade, investment and business partnerships.

Japanese companies continue to view India as one of the most attractive overseas markets. A survey released in 2025 by the Japan Bank for International Cooperation ranked India as the most promising overseas market for the fourth consecutive year. The findings show continued confidence among Japanese businesses in India’s long-term growth potential despite existing regulatory and infrastructure-related challenges.

Japanese foreign direct investment (FDI) in India has also increased in recent years. Japanese FDI rose from $1.49 billion in the financial year 2021-22 to $2.48 billion in FY 2024-25. Although the investment figures have improved, India still accounts for a relatively small share of Japan’s total outward FDI. From April 2000 to December 2024, cumulative Japanese investments in India reached $43.28 billion. This made Japan the fifth-largest source country for foreign direct investment in India during the period.

Trade between the two countries has also remained significant. Japan’s bilateral trade with India stood at $27.47 billion in FY 2025-26. Japan exported goods worth $21.43 billion to India, while imports from India totalled $6.04 billion. India is currently Japan’s 14th-largest trading partner. At the same time, Japan ranks as India’s 10th-largest trading partner.

The launch of the Japan-India Economic Affairs Division marks a fresh step in Japan’s strategy to strengthen business ties with India. The division will focus on removing barriers, improving the investment climate and supporting companies that see India as an important destination for future growth. Through closer government-level engagement, Japan aims to create better opportunities for its businesses while further expanding economic cooperation with India.