Japanese investments in India's tech, startup ecosystem cross $9.2 billion, led by Softbank's push: Nasscom report

India's IT/startup industries have been attracting billions of dollars from overseas markets since the last few years. Besides the US and China, Japan has been eyeing India's growing tech market, with the investment from the country now crossing $9.2 billion, a report launched by Nasscom in collaboration with the Japanese ministry of economy, trade and industry has said.

The report takes into account the investment from Japan into India during the period between 2016-2021, when the new-age companies in the country raised funds due to scalable disruptive business models.

The total investment from Japan till date has reached $9.2 billion, led by large-ticket deals from investors like Softbank. The company has backed some of the biggest startups in the country including OYO, Paytm, Ola, Flipkart, Meesho, Grofers, Swiggy, Unacademy, among many others. Softbank's two funds, Vision fund I and II, have infused billions of dollars into the India's startup ecosystem, catapulting several among them to the unicorn club. This year alone, Softbank has invested over $2 billion in many unicorns, soonicorns of India.

As per the report, edtech, fintech, healthcare and mobility are the hottest sectors, attracting investment from multiple Japanese investors, followed by e-commerce, enterprise, and real estate.

The Indian IT sector has enabled many Japanese corporations to adopt digital capabilities and innovative business models, the report said. The Japanese policymakers view India as a reliable partner for accelerating Japan's digital transformation and started investing heavily in Indian tech startups since 2016, the report noted.

It added that Japanese investment in the Indian IT and startup ecosystem has grown ~4X times since 2016, thus helping create over 1 lakh jobs. As a result, total employment generation in the technology and IT space would reach 3.6 lakh by 2023, where startups would contribute 80% of the total employment. The employment generation is led by increased funding available for Series D and above startups, accompanied by many deals coming for early-stage startups and increased investment in IT and technologies like artificial intelligence, machine learning and Internet of Things, etc.

"This increase in the investment by Japan is a testament to our performance and expertise. The technology industry has become a reliable partner for digital transformation journey and innovating new business model to Japanese companies. Japan and India have worked as strategic partners leveraging their respective strengths and co-creation to bring best products for the global market," Nasscom President Debjani Ghosh said in a statement.

Yasuyuki Murahash, the Chief Director General of Japan External Trade Organisation (JETRO), said that the growth of India's digital sector under COVID has been remarkable, and many Japanese companies are paying attention to the Indian ecosystem.

"This year, JETRO launched the "J-Bridge" platform and is working on promoting DX and open innovation through collaboration between Japanese companies and Indian start-ups. We are also working with Nasscom on seminars and business matchings such as this time to strengthen collaboration and create new business in the digital field between Japan and India," Murahash added.

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