Japanese car giants Toyota, Honda, and Suzuki are ramping up investments in India as part of a broader strategy to reduce reliance on China and strengthen local manufacturing capabilities.

Toyota and Suzuki have announced combined investments of nearly $11 billion to expand production and export operations in India — the world’s third-largest automobile market. Meanwhile, Honda recently revealed plans to establish India as a base for producing and exporting one of its upcoming electric vehicle (EV) models.

Industry executives note that India’s low production costs, skilled workforce, and government incentives under the Make in India initiative are key factors driving this shift. Improved manufacturing quality and a stable policy environment have further enhanced India’s appeal.

Japanese carmakers are also leveraging India’s advantage as a market relatively insulated from Chinese EV competition, as the country remains largely closed to Chinese automakers such as BYD.

In contrast, Japan’s direct investment in China’s transport sector fell 83 per cent year-on-year to 46 billion yen, reflecting a sharp slowdown amid intensifying local competition and falling profit margins caused by an ongoing price war among Chinese EV makers.

Toyota, which has been collaborating with Indian and Japanese vendors to reduce production costs, is expanding its capacity for hybrid component manufacturing following a surge in domestic demand. The company plans to launch 15 new and refreshed models and expand its rural network across India by the end of the decade, targeting a 10 per cent share of the passenger car market, up from the current 8 per cent.

This growing wave of investment underscores Japan’s strategic pivot towards India as a global automotive hub, positioning the country at the forefront of Asia’s next phase of automotive growth.

(Source: Outlook Business)