Japan Becomes Top FDI Source For India In Q1 FY27 With USD 5.71 Billion Inflows

New Delhi, Oct 12 (KNN) Japan emerged as the largest source of foreign direct investment (FDI) into India in the April-June quarter of FY27, with inflows accounting for nearly 29 per cent of the country’s total equity investments during the period, according to government data.

India received USD 5.71 billion in FDI from Japan during the quarter, compared with USD 19.81 billion in total equity inflows. The latest quarterly investment also exceeded the USD 3.74 billion received from Japan during the entire 2025-26 fiscal year.

Japan has committed to investing 10 trillion yen in India over a decade under an investment target announced in 2025, reported PTI.

Financial Services Drive Investments

According to Anil Talreja, Partner, Deloitte India, the latest surge in Japanese investment was driven mainly by financial-sector deals and acquisitions rather than greenfield manufacturing. 

Banking, technology, digital infrastructure and global capability centres (GCCs) are attracting a growing share of investments. In April, Japan’s MUFG Bank acquired a 20 percent stake in Shriram Finance for Rs 39,618 crore (around USD 4.4 billion). 

Talreja said Japanese firms were diversifying supply chains amid geopolitical tensions, rising manufacturing costs and tariff risks, while India’s manufacturing base, technology ecosystem and consumer market attracted long-term capital.

Emerging areas for bilateral cooperation include artificial intelligence, semiconductors, critical minerals, batteries, energy and next-generation mobility.

Investment Expands Across Sectors

Rudra Kumar Pandey, Equity Partner, Shardul Amarchand Mangaldas & Co, said recent inflows reflected strategic investments, new market entries and expansion by established Japanese companies. 

Financial services, construction and logistics are driving investments, while automotive, batteries, manufacturing, renewable energy, food processing and insurance remain key sectors.

Semiconductors, railways and defence offer further investment opportunities, he said. Japanese financial institutions are also expanding in India’s retail and MSME credit markets, banking, asset management and insurance, bringing funding capabilities and cross-border business networks.

Industrial Infrastructure For Japanese Investors

India has established 12 Japanese industrial townships across nine states, offering dedicated infrastructure, Japan desks, Japanese-standard utilities and single-window regulatory support to facilitate investment. 

Commerce and Industry Minister Piyush Goyal visited Japan last month to strengthen bilateral trade and investment ties.

Singapore Ranks Second

After Japan, Singapore was the second-largest source of FDI during the April-June quarter, with inflows of USD 5.22 billion. Mauritius followed with USD 2.4 billion, the Netherlands with USD 1.38 billion and the United States with USD 1.35 billion.

(KNN Bureau)