Tokyo, Aug 4. Japan has established a dedicated division in its Foreign Ministry to support small and medium-sized enterprises (SMEs) and startups seeking to enter or expand in the Indian market, with a key focus on using diplomatic channels to address regulatory and business barriers.
The newly created Japan-India Economic Affairs Division, set up in April under the ministry’s Southwest Asia Division, became fully operational on August 3 following the appointment of its head. The division comprises around 10 officials, including dedicated staff.
Citing sources familiar with the development, Jiji Press reported that the division will identify regulatory and operational challenges faced by Japanese companies, particularly those without an existing presence or distribution network in India, and work with the Indian government to improve the business environment through bilateral consultations.
The move comes as Japan seeks to deepen economic engagement with India, one of the world’s fastest-growing major economies with a population of more than 1.4 billion and annual real GDP growth of around 7 percent.
Tokyo has set an ambitious target of facilitating 10 trillion yen (approximately $67 billion) in private-sector investment in India over the next decade. Investment programmes worth about two trillion yen have already been approved towards that goal.
Economic cooperation also featured prominently during last month’s summit between Japanese Prime Minister Sanae Takaichi and Prime Minister Narendra Modi, where the two leaders reaffirmed their commitment to strengthening bilateral economic ties and promoting growth in both countries.
India continues to be viewed as the most attractive overseas investment destination by Japanese businesses. A 2025 survey by the Japan Bank for International Cooperation (JBIC) ranked India as the most promising foreign market for the fourth consecutive year.
Despite this optimism, Japanese corporate expansion into India has slowed in recent years. As of 2024, 1,434 Japanese companies were operating in the country, a figure that has remained largely unchanged since crossing the 1,400-mark in 2018.
Industry observers attribute the slow pace of new investments to factors including regulatory uncertainty, differences in rules across Indian states, legal complexities and infrastructure constraints.
The new division plans to raise these concerns through summit-level engagements, ministerial meetings and other bilateral dialogue mechanisms in an effort to encourage reforms that facilitate Japanese investment.
“We want to solve problems facing companies through diplomacy,” a Japanese Foreign Ministry source was quoted as saying.
