Japan’s automotive giants Toyota, Honda, and Suzuki are charting a new course by pouring a combined $11 billion into India, reinforcing the country’s status as a global auto manufacturing powerhouse. As these companies shift supply chains and strategic focus away from China, this unprecedented investment signals a major transformation in the industry landscape.
Toyota—the world’s largest automaker—and Suzuki, which commands roughly 40% of the Indian car market, have rolled out individual plans totaling $11 billion to strengthen their manufacturing and export operations in India. Honda, meanwhile, announced it will use India as the base for one of its forthcoming electric car models, harnessing the nation’s low production costs and abundant skilled labor. For decades, India’s workforce and increasingly high-quality manufacturing have attracted global players, but now the momentum is accelerating as Japanese automakers recalibrate their global strategies.
The Shift from China to India
Japanese automotive executives report that Toyota, Honda, and Suzuki are scaling up efforts in India not only to tap a growing market but also to sidestep the stiff competition and shrinking profit margins facing foreign carmakers in China. In particular, the proliferation of aggressive Chinese EV makers such as BYD has made profitability a challenge in China, prompting Japanese companies to seek more favorable grounds. Another advantage: India’s strict policies effectively block new Chinese EV brands from entering the domestic market.
As the industry evolves, India is increasingly viewed as a replacement for China: offering better margins, less competition from Chinese brands, and more stable long-term prospects. According to London-based auto analyst Julie Boote, Japanese manufacturers see India as an attractive alternative due to these factors.
Accelerating Investment and Production Expansion
Japan’s direct investment in India’s transport sector—including automotive manufacturing—rose more than sevenfold between 2021 and 2024, reaching 294 billion yen ($2 billion) in 2024. Over the same period, investment in China’s transport sector dropped by 83% to only 46 billion yen, underscoring the dramatic shift in Japanese strategy.
Toyota is joining forces with local and Japanese suppliers to cut costs and ramp up production of hybrid components, responding to a surge in demand within India. The company is focusing on products tailored for the local market, emphasizing how important localization has become. By 2030, Toyota intends to launch 15 new and updated models in India, aiming to boost its share in the local passenger car segment from 8% to a targeted 10%, along with a more extensive presence in rural areas.
To achieve these ambitions, Toyota has earmarked over $3 billion to expand output at its southern India factory by 100,000 vehicles a year and to build a new plant in Maharashtra, which is set to open before 2030. This expansion is expected to push Toyota’s total Indian production capacity to over one million vehicles annually.
The Impact of Indian Government Policy
Prime Minister Narendra Modi’s administration is intensifying efforts to attract foreign manufacturing investment through incentives and subsidies, while India’s economy, which has grown at an 8% average over the past three fiscal years, provides fertile ground for expansion. India’s protective policies have made it tough for Chinese carmakers to enter, while local rivals like Tata Motors and Mahindra & Mahindra are capturing greater market shares with new SUV models.
In the fiscal year just concluded, India produced roughly 5 million passenger vehicles—almost 800,000 were shipped overseas, while domestic sales and exports both ticked upwards. S&P Global Mobility’s Gaurav Vangaal noted that India’s protectionist measures have created a unique opening for Japanese carmakers to reinforce their position and cost competitiveness.
Honda and Suzuki’s Long-Term Outlook
For Honda, India is its largest market for two-wheel vehicles and is becoming a focus for expanding its four-wheel operations. CEO Toshihiro Mibe stated that after the United States, India and Japan are Honda’s top strategic priorities for cars. The company is poised to make India the manufacturing and export hub for its new “Zero Series” electric vehicles, with exports to Japan and other Asian markets beginning in 2027.
Suzuki, through its Indian entity Maruti Suzuki, holds leadership both in car sales and as the country’s largest car exporter. Suzuki’s $8 billion investment is set to raise local production capacity from 2.5 million to 4 million vehicles annually. President Toshihiro Suzuki declared a vision to develop India into Suzuki’s global production center and boost exports worldwide.
Conclusion
With a strategic pivot from China and a collective investment of $11 billion, Toyota, Honda, and Suzuki are cementing India’s role as a central hub for global automotive production and innovation. Incentives from the Indian government, evolving market dynamics, and robust demand make India the focal point for Japanese carmakers seeking sustainable growth and global supply chain resilience.
