Japanese mergers and acquisitions activity in India touched a record 9 billion dollars in 2025, making it one of the strongest years for foreign investment inflows. The surge was led by MUFG investing 4.4 billion dollars in Shriram Finance, followed by JFE Holdings committing 1.75 billion dollars to Bhushan Power and Steel. The previous high point came in 2019 when ArcelorMittal and Nippon Steel acquired Essar Steel for nearly 7 billion dollars.
Since 2016, Japanese investors have deployed close to 20 billion dollars across 48 deals in India. The top 10 transactions alone accounted for 18.2 billion dollars, with 5 of these deals announced in 2025, together worth nearly 8 billion dollars.
The year marked a clear shift as Japan’s largest financial institutions expanded rapidly in India. MUFG announced a deal worth nearly Rs 40000 crore in December for a 20 percent stake in Shriram Finance, the largest foreign investment in India’s financial sector so far. In the same month, Mizuho Financial Group acquired a controlling stake in Avendus for Rs 4720 crore. Earlier in May, Sumitomo Mitsui Banking Corporation bought a 20 percent stake in YES Bank for Rs 13483 crore.
Market experts link this trend to Japan’s long standing economic challenges and India’s growth outlook. “Japan has faced 30 years of deflation, an ageing population with an average age above 60, and abundant liquidity but limited growth opportunities. India, in contrast, is poised for strong expansion over the next decade and fits squarely into the Asian century narrative,” said Ramakrishnan Kalyanaraman of Spark Capital.
Geopolitical shifts and Japan’s ultra low interest rate environment are also driving capital toward India. EY estimates that India’s banking system will need 170 to 200 billion dollars in capital over the next 5 to 6 years. Japan has already committed 68 billion dollars over the next decade, aligning with India’s need for long duration funding.
Experts believe Japanese capital often paves the way for wider corporate entry, deepening economic ties between the two countries.
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