India will emerge as the biggest destination for Japanese capital in the next 10 years, with financial services, technology, startups and social ventures in the country likely to see an increasing flow of funds, forecasts Sandeep Sikka, chairman of the Association of Mutual Funds in India (AMFI) and MD & CEO of Nippon Life India Asset Management, an arm of a Japanese insurer.

He said that Japan’s huge savings pool and India’s consistent, sustained growth made the two nations ideal partners for long-term investments.

“Japan has huge capital; however, it doesn’t have growth opportunities within the country. India has both growth and great focus on entrepreneurship. Unless we do something really wrong, India will become the biggest destination of capital flow from Japan,” he said. He was in Bengaluru to participate in IIMBues Leadership Conclave 2026 organised by the alumni association of Indian Institute of Management Bangalore here on Saturday (August 1, 2026).

The Indo-Japanese investment relationship was currently entering a new phase, moving beyond its traditional focus on manufacturing and infrastructure into financial services and the broader services sector, Mr. Sikka noted. The Indo-Japanese bilateral trade currently stood at $40 billion.

“Traditionally, most Japanese investments came into manufacturing and construction. Now the financial sector and services sector have started opening up. I often receive requests from Japanese firms exploring connections with Indian SMEs in the areas of chemicals, healthcare, technology, etc.,” he elaborated.

Japan invested about $8 billion in India last year, and this trend would continue as Japanese investors were exploring long-term growth opportunities outside their ageing economy, he observed , highlighting that Japanese businesses planned for generations instead of focusing on quarterly earnings and quick exits.

SIP boom insulates Indian stock market from FII capital flight

The country’s booming systematic investment plan (SIP) culture has fundamentally reshaped the equity market by creating a strong domestic buffer against foreign capital outflows, said Mr. Sikka.

He further said that the rise of SIPs had created a structural transformation by reducing the market’s dependence on foreign institutional investors. The country’s increasing number of retail investors has strengthened its market resilience and made capital markets less vulnerable to sudden swings in overseas fund flows, he elaborated. “We are, today, at a very interesting time where our domestic savings are good enough to take care of the outflows of foreign capital and that is because sustained monthly SIP inflows have become a powerful anchor for Indian equities.’’

Later, stressing the importance of disciplined investing. Mr. Sikka said the biggest wealth creators were often investors who remained patient through various market cycles instead of reacting to daily movements.

Warning investors of obsession for quick returns, he said, “People who invest in mutual funds for the long term, with small amounts and without worrying about what happens every day, are the ones who create the maximum wealth. That’s a mindset issue; we have to change and think for the next 10 years. Japan’s culture of long-term household savings can be a model for us,’’ Mr. Sikka pointed out.

Published - August 01, 2026 09:42 pm IST