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Japanese mergers and acquisitions in India hit a record in 2025 as corporates expanded dealmaking across key sectors. Deal data showed Japanese investment in India topped $9 billion, with finance as the main target.
Mitsubishi UFJ Financial Group agreed to invest about $4.4 billion for a 20% stake in Shriram Finance. Sumitomo Mitsui Banking Corporation also bought a 20% stake in YES Bank for Rs 13,483 crore.
The 2025 total marked Japan’s biggest annual M&A outlay in India since 2019. That year, Nippon Steel joined a large steel acquisition.
Over the past decade, Japanese buyers signed 48 Indian deals worth about $20 billion, based on deal data. Moreover, the top transactions accounted for about $18.2 billion.
Large deals landed in 2025. JFE Holdings agreed to invest about $1.75 billion in Bhushan Power & Steel. In December, Mizuho Financial Group agreed to buy a controlling stake in Avendus for Rs. 4,720 crore.
MUFG framed the Shriram Finance transaction as a long-term play on India’s retail credit cycle. This stake the agreement near Rs. 40,000 crore, according to various reports in December 2025.
Besides its size, the deal drew attention because it set a new benchmark for foreign direct investment in financial services. Consequently, bankers linked the move to tighter competition for scale in India’s lending market.
SMBC’s YES Bank investment in May added another large bet on the Indian banking sector. The stake purchase brought fresh capital to a mid-sized lender and broadened its shareholder base.
Meanwhile, analysts said Japanese megabanks often link equity stakes to wider partnerships. These partnerships can cover wholesale banking, treasury, and corporate client services.
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Advisers pointed to Japan’s domestic backdrop as a driver of outbound investment. The nation has faced low growth, an ageing population, and years of very low interest rates.
These factors compress returns for large pools of domestic capital. However, India’s expanding consumer base and credit demand offer a clearer growth runway.
Executives also cited diversification needs as geopolitics shift. India’s capital markets have improved liquidity, which supports entry and exit planning. EY estimated India’s banking system may need $170 billion to $200 billion in capital over five to six years.
Regulators have also signaled openness to foreign participation in financial services, according to industry advisers. Japanese investors have long experience in the sector. In 2012, Nippon Life bought a 26% stake in Reliance Capital’s asset management and fund business for Rs. 1,450 crore.
Deal makers expect continued interest in mid-sized lenders and diversified financial platforms. Japanese M&A in India may stay elevated if pipelines hold into 2026.
