New Delhi, April 7 As global supply chains realign and businesses look at setting up facilities outside China, India has emerged as a long-term strategic investment destination, with competitive export potential for Japanese mid-sized companies to partner with Indian MSMEs (micro, small, and medium enterprises) to drive growth.
The India–Japan 'Joint Vision for the Next Decade', adopted during Prime Minister Narendra Modi's visit to Tokyo in August 2025, encourages cooperation among SMEs by fostering visits by Japanese SMEs to India and by expanding downstream industries.
Japan aims to help its companies view India as a production base, considering its export-focused policies and its extensive trade agreement network, according to an article in the Japan Forward news portal.
Several new sectors have been identified where cooperation between the two countries could accelerate in the coming decade. Semiconductors and electronics are among the most promising areas. Japan's strengths in upstream semiconductor technologies align with India's rapidly expanding electronics market and strong government policy support, the article points out.
This could lead to joint development of OSAT (outsourced semiconductor assembly and test) and ATMP (assembly, testing, marking and packaging) facilities for semiconductors and deeper integration of electronics supply chains.
India's large domestic market acts as a buffer against global market volatility and provides a solid base for sustained business growth. Furthermore, its strategic geopolitical positioning further enhances its appeal for targeting markets in the Middle East and in Africa. Japanese firms that establish manufacturing units in India can capitalize on these global connections to expand their international footprint.
Besides, India's current and upcoming free trade agreements and bilateral partnerships with major global economies have opened new markets amid global uncertainties, the article observes.
MSMEs are among the most critical sectors, yet a highly underexplored frontier. This includes sectors such as packaging materials, cold chain infrastructure, warehousing, dairy, aerospace and defence.
The article also highlights that a significant milestone in the MSME collaboration between India and Japan has been Mitsui & Co, Ltd.'s investment in an Indian firm, Sneha Farms Pvt Ltd, one of India's leading broiler producers based in Hyderabad with an annual turnover of over Rs 1400 crore. The company has integrated operations encompassing feed manufacturing, broiler production, meat processing and packing, transportation, and retail.
India's food processing sector is a sunrise sector for Japanese companies to invest in. This is especially true for fruits, vegetables, and spices, making India a prospective base and export hub.
Similarly, Japan has been working closely with the Northeastern states in India since 2022. One of the programmes includes strengthening the bamboo value chain in the Northeast, with the objectives of enhancing value through value addition and processing, and developing the region as a hub of innovation and design for bamboo-based products. The other sectors include organic farming, horticulture, and the tea industry.
Japan is already India's fifth-largest investor, accounting for FDI flows to the tune of $44.40 billion over the past two decades. There are over 1,500 Japanese companies currently operating in India. The MSME wave is expected to accelerate this flow to drive the next wave of growth, the article added.
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