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Japanese automakers such as Toyota, Honda, and Suzuki are pouring billions of dollars into India, underscoring the country’s growing importance as a strategic manufacturing hub. This shift comes as Japanese car manufacturers restructure their global supply chains to reduce reliance on China.
Toyota, the world’s largest automaker, and Suzuki, which dominates India’s market with nearly 40% share, have each announced investments totaling approximately $11 billion to enhance production capacity and exports. Meanwhile, Honda recently revealed plans to establish India as a manufacturing and export base for one of its upcoming electric vehicle models. The country’s low production costs and abundant workforce have long been attractive to automakers.
Experts note that this pivot from China to India not only mitigates risks for Japanese firms but also helps them avoid direct competition with Chinese EV giants like BYD. “India is an excellent alternative to China,” remarked Julie Boote, an analyst at Pelham Smithers Associates (London), highlighting that profit margins in China are significantly lower.
Japan’s annual direct investment in India’s transportation sector surged over sevenfold from 2021 to 2024, reaching 294 billion yen (approximately $2 billion) last year. In contrast, investment in China plummeted by 83%, falling to 46 billion yen.
Toyota is collaborating with Japanese and Indian suppliers to reduce costs and expand production of hybrid components, which are in high demand. A senior executive at a major Toyota supplier noted that the company has begun localizing products, shifting from “global specifications” to “local specifications.”
The automaker plans to launch 15 new or refreshed models in India by the end of the decade and expand its rural sales network. Toyota aims to increase its market share in India’s passenger vehicle segment from 8% to 10%. Last year, the company announced a $3 billion investment to expand its existing plant in southern India by 100,000 vehicles annually and build a new facility in Maharashtra. Once completed, Toyota’s total production capacity in India will exceed 1 million vehicles per year.
India’s economic growth has averaged around 8% over the past three fiscal years, partly due to Prime Minister Narendra Modi’s government introducing incentives to attract foreign manufacturers. Last fiscal year, India produced approximately 5 million passenger vehicles, with nearly 800,000 exported. Domestic sales rose by 2%, while exports grew by 15%.
India’s restrictions on Chinese investment have further benefited Japanese automakers. “This protectionist stance presents an opportunity for Japanese companies to expand investments and enhance cost competitiveness,” said Gaurav Vangaal of S&P Global Mobility.
For Honda, India has long been a key market for its profitable two-wheeler segment, and the company is now ramping up its four-wheeler operations. Honda plans to make India the manufacturing and export hub for its “Zero series” electric vehicle, with exports to Japan and other Asian markets expected to begin in 2027.
Suzuki has also outlined an $8 billion investment plan to increase local production capacity from 2.5 million to 4 million vehicles annually. Maruti Suzuki, its Indian joint venture, is currently India’s largest automaker and exporter.
Chairman Toshihiro Suzuki emphasized, “We aim to develop India into a global manufacturing hub and boost exports from the country.”
Source: ET
Illustrative Image
Japanese automakers such as Toyota, Honda, and Suzuki are pouring billions of dollars into India, underscoring the country’s growing importance as a strategic manufacturing hub. This shift comes as Japanese car manufacturers restructure their global supply chains to reduce reliance on China.
Toyota, the world’s largest automaker, and Suzuki, which dominates India’s market with nearly 40% share, have each announced investments totaling approximately $11 billion to enhance production capacity and exports. Meanwhile, Honda recently revealed plans to establish India as a manufacturing and export base for one of its upcoming electric vehicle models. The country’s low production costs and abundant workforce have long been attractive to automakers.
Experts note that this pivot from China to India not only mitigates risks for Japanese firms but also helps them avoid direct competition with Chinese EV giants like BYD. “India is an excellent alternative to China,” remarked Julie Boote, an analyst at Pelham Smithers Associates (London), highlighting that profit margins in China are significantly lower.
Japan’s annual direct investment in India’s transportation sector surged over sevenfold from 2021 to 2024, reaching 294 billion yen (approximately $2 billion) last year. In contrast, investment in China plummeted by 83%, falling to 46 billion yen.
Toyota is collaborating with Japanese and Indian suppliers to reduce costs and expand production of hybrid components, which are in high demand. A senior executive at a major Toyota supplier noted that the company has begun localizing products, shifting from “global specifications” to “local specifications.”
The automaker plans to launch 15 new or refreshed models in India by the end of the decade and expand its rural sales network. Toyota aims to increase its market share in India’s passenger vehicle segment from 8% to 10%. Last year, the company announced a $3 billion investment to expand its existing plant in southern India by 100,000 vehicles annually and build a new facility in Maharashtra. Once completed, Toyota’s total production capacity in India will exceed 1 million vehicles per year.
India’s economic growth has averaged around 8% over the past three fiscal years, partly due to Prime Minister Narendra Modi’s government’s incentives to attract foreign manufacturers. Last fiscal year, India produced approximately 5 million passenger vehicles, with nearly 800,000 exported. Domestic sales rose by 2%, while exports increased by 15%.
India’s restrictions on Chinese investment have further benefited Japanese automakers. “This protectionist stance presents an opportunity for Japanese companies to expand investments and enhance cost competitiveness,” said Gaurav Vangaal of S&P Global Mobility.
For Honda, India has long been a key market for its high-profit two-wheeler segment, and the company is now ramping up its four-wheeler operations. Honda plans to make India the production and export hub for its “Zero series” electric vehicle, with exports to Japan and other Asian markets slated to begin in 2027.
Suzuki has also outlined an $8 billion investment plan to increase its local production capacity from 2.5 million to 4 million vehicles annually. Maruti Suzuki, its Indian joint venture, is currently India’s largest automaker and exporter.
Chairman Toshihiro Suzuki emphasized, “We aim to develop India into a global manufacturing hub and boost exports from the country.”
Source: ET
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