Japan is set to double its defense budget between FY2023 and FY2027, marking a historic shift in its postwar security posture and signaling the most significant expansion of its defense capabilities in decades. In FY2023, the Ministry of Defense (JMOD) was allocated a record 6.8 trillion yen (approximately $48 billion), positioning Japan as the ninth largest defense spender globally and the third largest in Asia, behind only China and India.
Traditionally, the bulk of JMOD’s budget has been devoted to personnel, operational expenses, training, and routine development activities, with capital expenditures—including the procurement of major defense systems, aircraft acquisition, shipbuilding, and research and development (R&D)—comprising the second-largest category. This budgeting structure has historically reflected Japan’s defense-oriented security policies and constitutional constraints on the use of force. However, recent policy reforms and strategic reassessments are prompting a substantial reallocation of defense resources toward capabilities aimed at deterring and responding to regional threats.
Japan’s decision to significantly increase its defense budget is driven by growing concerns over a deteriorating regional security environment. North Korea’s advancing ballistic missile technologies, including multiple missile launches into Japan’s Exclusive Economic Zone (EEZ), continue to raise alarm. China’s increasing maritime and air activities near Japanese territory, particularly around the Senkaku Islands, along with the broader implications of Russia’s invasion of Ukraine, have underscored the urgency for Japan to strengthen its self-defense and deterrence capabilities.
For decades, Japan adhered to an informal cap on defense spending—maintaining it at around one percent of GDP, a reflection of its pacifist constitution and postwar norms. However, under the current government’s strategic shift, Japan is working to reach a NATO-aligned benchmark of two percent of GDP by FY2027. This would bring Japan in line with other advanced democratic nations and reflects both domestic recognition of strategic necessity to increase defense spending as well as alignment with U.S.–Japan alliance priorities.
As part of this transformation, Japan is also increasing its foreign military acquisition (FMS) spending, with planned annual expenditures rising from $14.8 billion to $22.5 billion between 2023 and 2027. These funds support Japan’s procurement of advanced U.S. defense systems, including next-generation missile defense technologies, standoff munitions, surveillance assets, and integrated command-and-control infrastructure.
The U.S. Department of Defense’s Defense Security Cooperation Agency (DSCA) administers U.S. defense equipment foreign military sales (FMS) to Japan. The Mutual Defense Assistance Office (MDAO) at the U.S. Embassy in Tokyo is the in-country office for FMS sales to Japan. The Government of Japan initiates such FMS transactions with the U.S. Government for specific items or services by submitting requests for price and availability data to the U.S. Government. By contrast, the Government of Japan initiates direct commercial sales (DCS) from U.S. private defense trading firms, distributors, and agents through direct inquiries with these entities.
In October 2015, Japan established the Acquisition Technology and Logistics Agency (ATLA) under the JMOD. The ATLA is responsible for defense equipment policy and logistics planning, procurement, and defense industrial policy. In addition, ATLA administers defense equipment R&D, R&D policy, and management of R&D institutes. The ATLA integrated various of Japan’s acquisition functions under its Internal Bureau, Staff Offices, Technical
Research and Development Institute (TRDI), and Equipment Procurement and Construction Office (EPCO). Roughly 1,800 officials work in ATLA under a commissioner who reports directly to Japan’s Minister of Defense.
As with any other government procurement, potential vendors to the JMOD and Japan Self Defense Forces (JSDF) are required to apply and register with the Government of Japan. U.S. military equipment makers may benefit from partnering with Japanese trading firms, distributors, or agents for purposes of conducting business with the Japanese military. Japanese partners are also helpful in addressing Japanese language issues as well as unique Japanese cultural and business practices.
Leading Sub-sectors
In response to a declining population, Japan prioritizes unmanned and autonomous defense technologies.
Opportunities
Japan’s budget expansion is guided by updated national security and defense planning documents released in late 2022 and early 2023, including the National Security Strategy (NSS), the National Defense Strategy (NDS), and the Defense Buildup Program. Together, these frameworks outline a comprehensive roadmap for modernizing Japan’s Self-Defense Forces (JSDF) and prioritize seven strategic areas of investment: (1) Standoff Defense Capabilities; (2) Integrated Air and Missile Defense; (3) Unmanned Defense Capabilities; (4) Cross-Domain Operations; (5) Command and Control / Intelligence Functions; (6) Mobility, Deployment, Civil Protection; (7) Sustainability and Resiliency
Beyond these seven pillars, Japan is also reinforcing its ability to defend remote islands and respond to large-scale natural disasters, which remain critical components of its national defense strategy. In this context, the JSDF continues to expand training, logistics support, and dual-use infrastructure designed to ensure resilience in the face of both military and humanitarian crises.
Collectively, these efforts represent a significant evolution in Japan’s defense planning and posture. The combination of increased funding, new strategic doctrine, and accelerated foreign procurement is intended not only to strengthen Japan’s deterrence and response capabilities but also to enhance interoperability with U.S. and allied forces. As Japan takes on a more proactive role in regional security, these reforms underscore its commitment to preserving stability in the Indo-Pacific and maintaining the rules-based international order.
Resources
Government of Japan Agencies
Commercial Service Japan Contact
For additional information about Japan’s defense procurement, please contact the U.S. Commercial Service at Office.Tokyo@trade.gov or Ms. Sayoko Koto at sayoko.koto@trade.gov.
Trade Shows
DSEI Japan
Dates: May 2027
Venue: Makuhari Messe
Description: DSEI Japan brings the global defense sector together with both the Japanese and wider Asian defense community to innovate, partner and share knowledge.