# The India Employee Benefits Stack for Japanese companies

> Japanese parents are used to employer-administered health and pension schemes and long-service retirement allowances. India's gratuity is the closest match to that allowance, and it needs funding from day one.

By Akshay Golechha, Chief Business Officer at Plum (https://www.linkedin.com/in/akshaygolechha/). Published by Plum (https://www.plumhq.com). Canonical: https://www.plumhq.com/india-benefits-stack/japan. Updated 2026-10-05. Part of The India Employee Benefits Stack: https://www.plumhq.com/india-benefits-stack.

## In short

- There is no equivalent of Japanese health insurance (kenkō hoken) in India. Employees above ₹21,000 a month have no statutory cover; employers buy Group Health Insurance.
- The employees' pension maps to EPF (12% + 12% on basic), the retirement allowance to statutory gratuity after five years, and work-injury insurance to the Employees' Compensation Act plus Group Personal Accident.
- Since 21 November 2025 basic pay must be at least 50% of remuneration, which breaks allowance-heavy Japanese salary structures.

## Questions

### Is there an equivalent of health insurance (kenkō hoken) in India?

No. India has no statutory employer health insurance for salaried staff above ₹21,000 a month. Employees at or below that wage sit in ESI, the Employees' State Insurance scheme. Everyone else is covered only if the employer buys a Group Health Insurance policy, which almost every Japanese subsidiary does.

### Do Japanese expatriates (chūzaiin) have to contribute to EPF in India?

Not if they hold a certificate of coverage under the India–Japan Social Security Agreement, in force since 2016. Without it, an international worker must contribute to EPF on full salary with no wage ceiling, which is expensive. Get the certificate before the posting starts.

### What replaces the retirement allowance (taishokukin) for Indian employees?

Gratuity. It is a statutory lump sum of 15 days' basic pay per year of service, payable after five continuous years, or after one year for fixed-term employees under the 2025 Labour Codes. Unlike a Japanese retirement allowance it is not discretionary, and the liability should be provisioned and insured.

### Can we pay a Japanese-style twice-yearly bonus (shōyo) in India?

Yes. Structure it as a performance bonus in the offer letter. Employees earning up to ₹21,000 a month are also owed a statutory bonus of at least 8.33% under the Payment of Bonus Act, and the total of all allowances and bonuses counts toward the rule that basic pay must be at least 50% of remuneration.

### How much should a Japanese manufacturer budget for employee benefits in India?

Plan on statutory contributions of roughly 13% to 16% of gross payroll for shop-floor staff (EPF, ESI, gratuity provision, statutory bonus) and 17% to 18% for staff above the ESI ceiling, plus Group Health and Personal Accident premiums of ₹6,000 to ₹25,000 per head a year depending on sum insured and whether parents are covered.

## What changes when you come from Japan

### Assignees from Japan and India's EPF

**The rule.** Foreign nationals employed in India are International Workers under EPF. They must join from day one, with contributions on full salary: the ₹15,000 wage ceiling does not apply.
**Japan and India.** India and Japan have a social security agreement in force since 2016. Staff seconded from Japan with a certificate of coverage can stay in the Japanese scheme and be exempt from Indian EPF for the detachment period the agreement sets. Get the certificate before the first Indian payroll run.

### Mapping Japanese benefits to India

**At home.** Employees' health insurance and employees' pension insurance through the employer, plus a retirement allowance based on length of service.
**In India.** Group health insurance (GHI) for health, EPF for pension. Gratuity is the Indian retirement allowance: fund it through an insured gratuity scheme rather than carrying it as an unfunded liability.

### Overlap between Tokyo and India

**Time difference.** Tokyo is 3½ hours ahead of India all year (neither country uses daylight saving), so Japanese afternoons overlap Indian mornings.
**What to set up.** Agree who in India signs off endorsements, claims escalations and renewals, so nothing waits for headquarters' business hours.

### India–Japan tax treaty

**Treaty.** India and Japan have a double taxation avoidance agreement. Short visits are usually exempt from Indian tax under the treaty's 183-day and employer conditions; check the exact article before relying on it.
**Secondments.** Long secondments can create a permanent establishment for the parent. Structure recharges and employment contracts with a tax advisor before staff move.

## What you call it in Japan, and what it is called in India

There is no health insurance (kenkō hoken) in India. A salaried employee earning more than ₹21,000 a month has no statutory health cover at all, and the shop floor below that line sits in ESI, a government scheme that most Japanese subsidiaries top up on day one. That single gap explains most of the benefits questions a Tokyo HR team asks in its first year in India.

| At home in Japan | In India | What changes for the employer |
| --- | --- | --- |
| Health insurance (健康保険, Kenkō Hoken): Employer-sponsored health insurance through Kyōkai Kenpo or a Kenpo Kumiai, roughly 10% of salary split 50:50. | ESI for employees at or below ₹21,000/month; Group Health Insurance (GHI) for everyone else | No statutory cover above the ESI wage ceiling. GHI is voluntary in law and universal in practice among Japanese plants. India-median sum insured is ₹5 lakh; global-standard employers buy ₹10 lakh and cover parents. |
| Employees' pension (厚生年金, Kōsei Nenkin): Employees' pension insurance, 18.3% of salary split 50:50. | EPF and EPS (Employees' Provident Fund and Pension Scheme) | 12% employer plus 12% employee on basic wages. The Labour Codes, effective 21 November 2025, push basic to at least 50% of total remuneration, which raises the EPF bill for salary structures imported from Japan. |
| Unemployment insurance (雇用保険, Koyō Hoken): Unemployment insurance, employer pays the larger share. | No direct equivalent. ESI carries a small unemployment allowance (ABVKY) for insured workers only | Nothing to contribute. Severance risk is carried instead through notice pay, retrenchment compensation under the Industrial Relations Code (15 days per year of service) and gratuity. |
| Work-injury insurance (労災保険, Rōsai Hoken): Workers' accident compensation insurance, fully employer-funded, rate varies by industry. | Employees' Compensation Act 1923 (or ESI where covered) plus Group Personal Accident (GPA) | The statutory layer is thin and the payouts are low. GPA at 3 to 5 times annual salary is the plant-floor norm and is the first thing a works committee asks about. |
| Retirement allowance (退職金, Taishokukin): Lump-sum retirement allowance, contractual, often funded through a DB or DC plan. | Gratuity under the Payment of Gratuity Act 1972 | Mandatory, not discretionary: 15/26 of last drawn basic per year of service after five continuous years, one year for fixed-term staff since the 2025 reforms, capped at ₹20 lakh. Provision it from day one and insure the liability through a gratuity fund. |
| Bonus (賞与, Shōyo): Twice-yearly bonus, typically two to five months' salary, discretionary. | Statutory bonus under the Payment of Bonus Act (8.33% to 20%) plus any performance bonus | Statutory for employees earning up to ₹21,000/month, computed on ₹7,000 or the minimum wage. A Japanese-style summer and winter bonus is fine, but it counts toward total remuneration for the 50% basic rule. |
| Annual health check (健康診断, Kenkō Shindan): Annual health check required by the Industrial Safety and Health Act. | Statutory only for hazardous processes under the Factories Act and OSH Code; otherwise a voluntary benefit | Most Japanese parents mandate it group-wide anyway. In India it is run as an employer benefit, usually as an on-site camp at the plant once a year. |
| Commuting allowance (通勤手当, Tsūkin Teate): Commuting allowance, tax-free up to ¥150,000 a month. | Conveyance or transport allowance; plant buses for shift staff | The tax exemption is gone under the new income-tax regime. For a plant, a contracted bus service is more common than a cash allowance and is expected by shift workers. |
| Housing allowance (住宅手当, Jūtaku Teate): Housing allowance, taxable. | House Rent Allowance (HRA) | Tax-efficient only under the old income-tax regime and only against rent actually paid. It sits inside the allowance bucket that the 50% rule constrains. |
| Paid leave (有給休暇, Yūkyū Kyūka): 10 to 20 days of paid leave, with five days' mandatory use. | Earned leave under the Factories Act (one day per 20 worked) or the state Shops and Establishments Act | Entitlements vary by state and by whether the site is a factory or an office. Sick and casual leave are separate buckets. Encashment of unused earned leave is common and tax-exempt on exit up to ₹25 lakh. |
| Maternity and childcare leave (産休・育休, Sankyū / Ikukyū): Maternity and childcare leave, paid through health and employment insurance. | Maternity Benefit Act: 26 weeks paid by the employer (12 weeks from the third child); no statutory paternity leave | The cost is the employer's, not a social insurer's. Maternity is the single largest claim category in Plum's book, so the GHI maternity sub-limit matters more here than in Japan. |
| Long-term care insurance (介護保険, Kaigo Hoken): Long-term care insurance from age 40. | None | Nothing to contribute. In practice Indian employees ask instead for parents to be covered under GHI, which is why parental cover is the most-requested add-on in Plum's data. |

## What Japanese companies get wrong when they set up in India

1. **Maternity is covered by the insurer, like at home.** In India the employer pays 26 weeks of salary directly under the Maternity Benefit Act. Group health covers the hospital bill only up to a sub-limit, typically ₹50,000 to ₹1 lakh, against an average delivery claim of about ₹1 lakh in Plum's book.
2. **Everyone is on statutory health insurance.** Only employees earning up to ₹21,000 a month are, through ESI. Above that line India has no statutory health obligation at all. Group Health Insurance is voluntary in law and what every Japanese subsidiary buys in practice.
3. **Our Japan salary structure will work in India.** Since 21 November 2025 basic pay must be at least 50% of remuneration. A structure carrying commuting allowance, housing allowance and a large special allowance over a 35% basic is non-compliant and understates EPF and gratuity.
4. **retirement allowance (taishokukin) is discretionary, so we can decide later.** Gratuity is statutory: 15 days of basic per year of service after five years, one year for fixed-term staff. It must be provisioned from the first payroll and is usually insured through a gratuity fund.
5. **Life cover matters more than accident cover.** On an Indian shop floor the risk workers and unions price first is accidental injury and disability, and the statutory Employees' Compensation payout is small. Buy Group Personal Accident before Group Term Life.
6. **The annual annual health check (kenkō shindan) is mandatory in India too.** It is statutory only for hazardous processes under the Factories Act. For everyone else it is a benefit the employer chooses to buy, usually as an on-site camp once a year.
7. **expatriate (chūzaiin) can stay entirely on the Japan plan.** A global policy reimburses in yen, later. An India-admitted policy gives cashless admission with no hospital deposit. And without a certificate of coverage under the India–Japan Social Security Agreement, the expatriate is pulled into EPF on full salary.
8. **Parents do not need covering; that is the employee's business.** Parental cover is the most-requested add-on in India and parents account for about 40% of claims by relationship in Plum's data. Global-standard employers cover parents; the India median does not.

## Japan vs India, benefit by benefit

| Benefit | Japan | India |
| --- | --- | --- |
| Statutory health cover | Universal. Employees' Health Insurance for firms with 5+ staff, National Health Insurance for the rest. | ESI for employees earning up to ₹21,000 a month. Nothing above that line. |
| Employer health premium | About 5% of salary, matched by the employee. | 3.25% of wages into ESI below the line. Above it, a voluntary GHI premium of roughly ₹6,000 to ₹25,000 per head a year. |
| What the patient pays | 30% coinsurance with monthly caps. | Nothing at a network hospital under a cashless GHI claim. 100% out of pocket without cover. |
| Pension | employees' pension (kōsei nenkin) at 18.3% of salary, split equally. | EPF and EPS at 12% employer plus 12% employee on basic pay. |
| Retirement lump sum | retirement allowance (taishokukin), contractual, funded by the employer's plan. | Gratuity, statutory after five years, 15/26 of a month's basic per year, capped at ₹20 lakh. |
| Maternity | Paid through health and employment insurance; routine care covered up to about $5,000. | Employer pays 26 weeks of salary. GHI covers the hospital bill up to a sub-limit. No statutory paternity leave. |
| Paid leave | 10 to 20 days, five of which must be taken. | Earned leave of about 15 days plus casual and sick leave, set by state law or the Factories Act. |
| Annual health check | Mandatory under the Industrial Safety and Health Act, employer-funded. | Statutory only for hazardous factory processes. Otherwise a voluntary benefit. |
| Accident cover | work-injury insurance (rōsai hoken), statutory, fully employer-funded. | Employees' Compensation Act with low payouts; Group Personal Accident bought voluntarily. |
| Mental health | Covered at 30% coinsurance; EAPs common. | Inpatient parity required in GHI since 2018; outpatient therapy only with an OPD add-on. |
| Unemployment insurance | unemployment insurance (koyō hoken), employer pays the larger share. | None. Severance risk sits in notice pay, retrenchment compensation and gratuity. |
| Long-term care | long-term care insurance from age 40. | None. Employees ask for parental health cover instead. |

## What headquarters is used to

Japan's statutory layer is broad, so the employer's job at home is mostly topping it up. That is the expectation headquarters brings to India, where the statutory layer is thin.

- **99%+** of Japan's population is enrolled in public health insurance
- **≈10%** of salary goes to employees' health insurance, split equally between employer and employee
- **30%** coinsurance paid at the point of care, with monthly caps
- **29.3%** of Japan's population is 65 or older, which shapes what employers fund

Source: Benefits Beyond Borders 2025, Plum's report on benefits in the economies investing in India (Japan chapter, citing the Commonwealth Fund, BMJ Public Health and Japan's Ministry of Health, Labour and Welfare). https://www.plumhq.com/benefits-beyond-borders

## Staff seconded from Japan

Expatriate staff usually stay on a global medical policy from Japan, but an India-admitted GHI is still worth adding: it gives cashless access to the hospital network without advance payment and claims paperwork in Japanese. Social security contributions are covered by the India–Japan Social Security Agreement, so a seconded expatriate (chūzaiin) with a certificate of coverage does not pay into EPF.

## Where Japanese companies set up in India

- **Neemrana Japanese Zone, Rajasthan.** Dedicated Japanese industrial zone on the Delhi–Mumbai corridor with 50-plus Japanese plants. Thin hospital network; plan for a Jaipur or Gurugram tertiary tie-up.
- **Manesar–Bawal, Haryana.** Suzuki, Honda and the auto-component belt. Dense network, high claim costs, strong union expectations on GPA.
- **Oragadam and Sriperumbudur, Tamil Nadu.** Nissan, Yamaha, Komatsu and the Chennai component ecosystem. Tamil Nadu has its own Shops and Establishments leave rules for the office staff.
- **Sri City, Andhra Pradesh.** Isuzu, Kobelco and a growing electronics cluster. Cross-border commuting from Chennai complicates ESI dispensary access.
- **Mandal–Bechraji and Sanand, Gujarat.** Suzuki's Gujarat plant and its suppliers. Lower medical inflation than the metros; Ahmedabad network within an hour.
- **Chakan and Talegaon, Maharashtra.** Bridgestone, Yazaki, and Pune's engineering belt. Pune is one of the seven cities benchmarked in the hub guide.

Japanese companies with operations in India include Maruti Suzuki, Honda Cars India, Toyota Kirloskar, Nissan, Yamaha Motor, Daikin, Hitachi, Panasonic, Sony, Mitsubishi Electric, Denso, Bridgestone, Komatsu, Isuzu.

## Benchmarks: what MNCs and GCCs offer in India

From [The Standard of Employee Benefits 2026–27](https://www.plumhq.com/standard-of-employee-benefits), Plum's report on 15,312 benefit plans, 5,20,100 claims and 74,543 checkups from Plum's FY26 book.

- **1.6×** MNC and GCC benefits spend per employee in India, against a funded Indian startup (nearly 3× a local Indian business). ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **43%** of MNCs and GCCs in India are Holistic Leaders: deep insurance plus real breadth of healthcare beside it. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **₹7,50,000** median MNC/GCC sum insured, covering parents or in-laws, with ₹1,00,000 maternity cover and no copays or sub-limits. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3))
- **~2%** of payroll buys India's top-quartile plan, against roughly 15% in the US, 10–25% across Europe and 8–15% across APAC. ([source](https://www.plumhq.com/standard-of-employee-benefits#s2-3-coverage))

## Further reading on plumhq.com

- [How MNCs structure health insurance for Indian subsidiaries](https://www.plumhq.com/blog/mnc-health-insurance-india-subsidiary-structure): Global programmes, local policies and who signs what.
- [Do you need to match headquarters' benefits in India?](https://www.plumhq.com/blog/gcc-match-headquarters-benefit-standards-india): Where to mirror the parent plan, and where India needs its own design.
- [Insurance for expatriate employees in India](https://www.plumhq.com/blog/insurance-coverage-expatriate-employees-gcc-india): Covering seconded staff alongside the local plan.
- [Group insurance vs ESI: a guide for employers](https://www.plumhq.com/blog/group-insurance-vs-esi-employers-guide): Who must be in ESI, and where group health insurance takes over.
- [How to calculate gratuity in India](https://www.plumhq.com/blog/how-to-calculate-gratuity): Formulas, worked examples and a free calculator.
- [The Standard of Employee Benefits 2026–27](https://www.plumhq.com/standard-of-employee-benefits): Benchmarks from 4,500+ Indian employee health plans.

Sources: JETRO, Survey on Business Conditions of Japanese Companies in India; Japan Chamber of Commerce and Industry in India (JCCII) member directory; Embassy of Japan in India, list of Japanese companies operating in India; Code on Social Security 2020 and Code on Wages 2019, in force 21 November 2025; India–Japan Social Security Agreement, 2016.