India rising sun for Japanese investors

Pumped in a record $9 bn last yr, more to come

- CHRISTINA TITUS & MAHESH NAYAK

JAPANESE INVESTMENT IN India via mergers and acquisitions (M&A) surged to a historic high in 2025, one of the strongest years for foreign capital inflows for the country.

Japanese firms deployed over $9 billion in the year, led by MUFG’s landmark $4.4-billion investment in Shriram Finance, followed by JFE Holdings’ investment in Bhushan Power & Steel for $1.75 billion. Investment of similar scale by Japanese firms in India happened previously in 2019, when ArcelorMittal and Nippon Steel acquired Essar Steel for close to $7 billion.

Since 2016, Japanese investors have pumped close to $20 billion in India in 48 M&A deals, of which the top 10 accounted for $18.2 billion. Last year was a sharp peak, with five of the top 10 investments by Japanese firms in India since 2016-worth $8 billion-happening in 2025 alone.

MUFG'S DECEMBER ANNOUNCEMENT of a nearly ₹40,000 crore deal for a 20% stake in Shriram Finance is the biggest foreign direct investment in India's financial sector to date. In December, Mizuho Financial Group's acquisition of a controlling stake in Avendus for 4,720 crore, and Sumitomo Mitsui Banking Corporation's (SMBC) 13,483 crore purchase of a 20% stake in YES Bank in May were other major deals.