Rakuten's $100 Million India Play: A Strategic Gamble on Tech and Talent

Japan-based Rakuten Group has announced plans to invest at least $100 million in India, marking a significant escalation of its global expansion ambitions. The move, spearheaded by CEO Sunil Gopinath, underscores a bet on India’s rapidly growing tech ecosystem and a push to deepen ties in sectors like FinTech, e-commerce, and AI. But what does this mean for investors, and how does it fit into Rakuten’s broader strategy?

The Investment Blueprint: Where Is Rakuten Focusing?

While the $100 million commitment lacks specific sectoral details, Rakuten’s global priorities provide clues. The company has long prioritized FinTech, with its global $100 million FinTech Fund targeting payments, blockchain, and financial services. In India, this could translate into partnerships with startups like Twid, a "Pay with Reward" platform it invested in previously.

The e-commerce sector is another focal point. Rakuten’s cross-border marketplace, Rakuten Rakuma, recently expanded into the U.S. via a partnership with eBay—a model that could be replicated in India to connect local sellers with global buyers. Meanwhile, AI-driven innovation remains central. At its 2025 Product Conference in India, Rakuten highlighted the development of an AI 2.0 large language model, optimized for Japanese but potentially adaptable to India’s linguistic diversity.

Note: Rakuten’s stock has fluctuated amid global tech sector volatility, but its investment in high-growth markets like India could stabilize or boost future returns.

Leadership and Local Strategy

Gopinath’s role as CEO of Rakuten India Enterprise Private Limited is critical. Since taking the helm in 2023, he has emphasized India’s potential as a “full-ownership product team” rather than just a development hub. This shift suggests plans to localize decision-making and talent development.

Hiring is also a key component. While the $100 million announcement doesn’t specify headcount targets, Rakuten’s Rakuten SixthSense division—focused on AI-driven observability tools—has already hired executives like Jay Swamidass (Global Sales VP) and Subhash Chandra (Global Partnerships Head). These hires signal a push to scale enterprise software sales and alliances in India and beyond.

Global Context and Challenges

Rakuten’s India play is part of a broader 2025 strategy. The company is expanding its Open RAN telecom solutions in Africa and Europe, aiming to reduce network costs by 30–40% compared to traditional infrastructure. In India, discussions with telecom giants like Reliance Jio and Bharti Airtel continue, though progress has been slow.

However, challenges loom. India’s Production-Linked Incentive (PLI) scheme revisions, which prioritize sectors like footwear and textiles, may not align directly with Rakuten’s tech-focused agenda. Additionally, regulatory hurdles—such as data localization laws—could complicate its AI and e-commerce ventures.

The Numbers Behind the Move

• India’s AI sector: AI funding rounds in India grew by 5.2% from 2019 to 2025, with software and science/engineering sectors leading.
• Rakuten SixthSense’s growth: The observability division targets 15–20% growth in 2025, capitalizing on a global market projected to hit $10–15 billion by 2025.
• India’s FinTech market: Valued at $13.8 billion in 2023, it’s expected to grow at a 15% CAGR through 行2025, driven by digital payments and neobanks.

Conclusion: A Risky Bet with High Upside

Rakuten’s $100 million investment in India is a calculated gamble. By leveraging its global expertise in e-commerce, FinTech, and AI, the company aims to tap into India’s $3 trillion economy and its young, tech-savvy workforce. Success hinges on executing partnerships (e.g., with local telecoms and startups), navigating regulatory complexities, and capitalizing on India’s 5G rollout—a key enabler for Open RAN and AI infrastructure.

If Rakuten can localize its strategy effectively, the payoff could be substantial. India’s digital payments sector alone is projected to hit $1 trillion by 2025, while its AI talent pool ranks among the world’s largest. However, investors should monitor Rakuten’s stock performance and its ability to convert global innovations (like its AI 2.0 model) into India-specific products. The stakes are high, but for a company built on disruption, this is precisely the kind of bet that could pay off.