Starting a Business in Japan: A Guide for Indian Residents

Entrepreneurs in India have historically viewed Japan as a symbol of technology strength and a safe place to do business. However, the key changes regarding how to enter the market occurred during late 2025 and early 2026. While technology, trade and hospitality continue to offer great opportunities, there are restrictions on how to come into the country and invest in these businesses—particularly concerning visas and foreign direct investment (FDI).

For any Indian entrepreneur wishing to establish a company in Japan, the process is more complicated than simply obtaining a visa; they must also work through both Japanese corporate law and Indian Foreign Exchange Management Act 2000 or FEMA as it pertains to their country.

In this guide we will provide an overview of the requirements, costs, and other realities of starting a business in Japan at the end of December 2025.

1. Choosing Your Vehicle: KK vs. GK

To start, you need to make a decision about how to structure your Japanese business legally, rather than focusing on such things as banking and visa requirements. The main way for Indian businesses looking to set up a subsidiary in Japan is either as a:

• Kabushiki Kaisha (KK) - A KK (Joint Stock Company) is the most prestigious of all types of companies formed in Japan. If your ultimate goal is to enter into contracts with large Japanese companies or eventually list on the stock market, then you should consider forming a KK. The instant credibility associated with forming a KK will yield you immediate trust from your prospective clients.
• Godo Kaisha (GK) - A GK is comparable to an LLP/LLC in India. A GK costs less to set up than a KK, and has fewer reporting requirements than KK's. A lot of technology companies, and foreign subsidiaries including Apple and Amazon Japan have opted to use this type of business structure because it gives you the same protection of limited liability as a KK, but comes with less administrative burden.

2. The "Business Manager Visa" Shock of 2025

The most significant change for Indian entrepreneurs wishing to operate in Japan is that in the past, as long as the Indian entrepreneur was able to provide proof of a ¥5 million capital investment (approx. ₹28 Lakhs), he/she could establish residency and manage their business in Japan. Starting with October 16, 2025, the Japanese government has made major changes to the requirements for obtaining a Business Manager Visa.

To obtain a Business Manager visa, an applicant must comply with one of the following more stringent capital or employment criteria:

• Capital Requirement — As of 2025, an applicant for a Business Manager Visa must demonstrate a paid-up capital investment of ¥30 million, (1.65 crore) which is six times greater than the previous capital requirement.
• Employment Requirement — If an applicant does not meet the capital requirement, he/she must employ a minimum of one full-time Japanese national or permanent resident as an employee.

While it is possible to incorporate a new company with only ¥1 in capital investments, it is unlikely that an applicant will be approved for a Business Manager Visa if neither of the above criteria is satisfied.

3. The Step-by-Step Requirements

If you are ready to proceed, here is the roadmap:

Step 1: Secure a Physical Address

Japan is strict about "substance." Virtual offices are often rejected for banking and visa purposes. You need a physical office lease.

Step 2: Draft Articles of Incorporation (Teikan)

These must be in Japanese. For a KK, these must be notarized by a Japanese notary public. GKs skip the notarization step, saving you roughly ¥50,000.

Step 3: Capital Injection

This is the "Chicken and Egg" problem. You need a bank account to deposit capital to register the company, but you can't open a company bank account until you are registered.

• Solution: You usually deposit the capital into the personal bank account of a Resident Representative (a temporary local director) or use a specialized "capital custody" service provided by legal firms.

Step 4: Registration

Submit documents to the Legal Affairs Bureau. Once processed, you receive your Certificate of Incorporation (Tokibo Tohon).

4. The Biggest Hurdle: Opening a Japan Business Account

Opening a corporate bank account in Japan is known to be difficult for non-Japanese citizens and is sometimes considered harder than registering a company. The Japanese banking system is required to follow stringent AML laws, which means that newly registered companies, especially those with directors who are not resident Indians and have no prior business history, are deemed to be high-risk.

These tips may assist you in receiving approval by Japanese banks for your foreign-owned corporate bank account.

1. Go with Regional Banks instead of Mega Banks. The larger mega-banks such as MUFG or SMBC typically reject over 60% of all applications from foreign-owned start-ups, whereas smaller regional banks or net-banks such as SBI Shinsei Bank or Rakuten Bank have a considerably higher success rate for foreign-owned corporate accounts.
2. Have a Resident Director. Involvement of a Japanese resident on your company board will improve your chances of receiving approval from Japanese banks considerably.
3. Provide a Professional Japanese Website and Fixed-Line Phone Number. Japanese banks often require a professional Japanese-language website, in addition to a standard fixed-line phone number (03-xxxx...). All of these items can help create a "trust signal" to the Japanese banker.

5. The Indian Side: FEMA Compliance (ODI)

While focusing on Japan, do not forget the regulations back home. Sending money from India to set up a Japanese company falls under Overseas Direct Investment (ODI) regulations.

• For Indian Individuals: You can invest up to USD 250,000 per financial year under the Liberalised Remittance Scheme (LRS) to set up a JV or Wholly Owned Subsidiary (WOS) in Japan. You must comply with the "bona fide business" activity norms.
• For Indian Companies: An Indian entity can invest up to 400% of its Net Worth in a foreign subsidiary. This requires filing Form FC with the RBI through an Authorised Dealer Bank and obtaining a Unique Identification Number (UIN) for the Japanese entity.

Warning: Failure to report this investment or filing the Annual Performance Report (APR) late can lead to severe penalties under FEMA.

Conclusion

Japan is still a great place for a business, but there have been some changes that have made it more difficult to start one. In 2025, the minimum amount of capital required for a visa in Japan will increase to ¥30 million ($250,000). This means that people planning to start a business in Japan will have to put a lot of investment into the company and invest time and effort into developing a strategy.

As a potential entrepreneur, you should seek out an experienced partner who has experience in both countries and who can help you establish a corporation in Japan and ensure that funds coming from India for your Japanese business meet all FEMA regulations.

Don't let regulations impede your global growth. FEMA Consultant has years of experience creating structures for Overseas Direct Investments (ODIs) with little to no disruption to your day-to-day activities.

Reach out to us today so we can work together on your market entry strategy into Japan.