Japan’s Project to promote SMEs to upgrade their productivity is a national programme that supports technology adoption, productivity improvement and business transformation among small and medium-sized enterprises. Led by the Ministry of Economy, Trade and Industry and the Small and Medium Enterprise Agency, the programme brings together several subsidy schemes covering digitalisation, automation, equipment upgrading, business restructuring and succession planning. Delivery is carried out through designated implementing organisations and public calls, with support tailored to different types of firms and investment needs. With an annual budget of approximately JPY 340 billion in fiscal year 2024, the programme has supported large numbers of SMEs across Japan. The model highlights the value of combining multiple subsidy instruments, local delivery channels and performance-oriented monitoring within a single productivity policy framework.
Japan’s SME Productivity Revolution Programme
Abstract
|
|
Objectives |
|
|
|
Delivery arrangements |
|
|
|
Budget |
|
|
|
Outreach |
|
|
|
Targets |
|
|
|
Closest UK Counterpart |
|
Introduction
The SME Productivity Revolution Promotion Programme is a multi-year initiative by the Japanese government aimed at strengthening the productivity, competitiveness, and resilience of small and medium-sized enterprises (SMEs). Grants and subsidies under this programme contribute to three main objectives:
Boosting productivity and technological adoption by supporting investment in ICT, automation, and labour-saving equipment to help SMEs overcome low productivity and labour shortages.
Supporting business transformation and growth by facilitating digitalisation, business model innovation, and strategic investments, including business succession and M&A, to enable long-term competitiveness.
Addressing regional and national economic needs by encouraging SMEs across all prefectures to modernise operations, adopt sustainable practices, and integrate into global value chains.
For example, since inception, various schemes have focussed on different aspects of SME productivity, such as:
Manufacturing, Commerce, and Service Productivity Subsidies (also known as the Monozukuri Subsidy): Supports SMEs in developing new technologies, products, or services, including equipment investment and digitalisation. Grants cover 30-50% of eligible project costs, depending on project type.
Small-Scale Enterprise Sustainability Subsidies: Supports small businesses in productivity improvements, sales channel expansion, and business transformation. Typical grants range from JPY 500 000 to JPY 2 500 000 per project.
IT Introduction Subsidies: Promotes the adoption of IT systems and digital tools to automate operations, improve workflow efficiency, and enhance competitiveness. Projects can last up to 18 months, with grants covering 50-75% of eligible costs.
Business Succession and M&A (merger and acquisition) Subsidies: Assists SMEs with succession planning and M&A activities, providing consulting support, legal advisory, and partial funding for project costs. Grants are typically capped at JPY 3-5 million depending on project scope.1
Delivery arrangements
The SME Productivity Revolution Promotion Programme is led by Japan’s Small and Medium Enterprise Agency (SME Agency, part of METI) and delivered through designated implementing organisations such as the Organisation for SMEs and Regional Innovation, Japan (SMRJ). The agency sets the overall framework, objectives, and budget, while each major subsidy line under the programme is administered via public calls.
SMEs submit applications electronically, which are screened by external panels for eligibility, productivity improvement potential, and project feasibility. Approved SMEs then implement their projects, investing in equipment, IT, digitalisation, or succession planning, and receive grants covering part of the costs. Projects are monitored to ensure outcomes such as productivity gains, digital adoption, or wage growth, with reporting and follow-up obligations enforced by the implementing agencies.
Specific delivery arrangements slightly change, depending on the specific programme and subsidy in question:
Manufacturing, Commerce, and Service Productivity Subsidies
Delivery: Managed by the National Federation of Small Business Associations acting as secretariat.
Application requirements: SMEs must submit a business plan describing how the investment (equipment, systems, or process innovation) will enhance productivity or competitiveness. Plans typically include cost breakdowns, projected productivity outcomes, and financial statements from the previous fiscal year.
Evaluation criteria: Innovation potential, feasibility, expected productivity gains, and alignment with DX (digital transformation) or GX (green transformation) priorities.
Small-Scale Enterprise Sustainability Subsidies:
Delivery: A consortium including the Central Federation of Societies of Commerce and Industry acting as secretariat.
Application requirements: SMEs must submit a business plan describing how the investment (equipment, systems, or process innovation) will enhance productivity or competitiveness. Plans typically include cost breakdowns, projected productivity outcomes, and financial statements from the previous fiscal year.
Evaluation criteria: Innovation potential, feasibility, expected productivity gains, and alignment with DX (digital transformation) or GX (green transformation) priorities.
IT Introduction Subsidies:
Delivery: Managed by TOPPAN Co.2 acting as secretariat.
Application requirements: SMEs must submit a business plan describing how the investment (equipment, systems, or process innovation) will enhance productivity or competitiveness. Plans typically include cost breakdowns, projected productivity outcomes, and financial statements from the previous fiscal year.
Evaluation criteria: Innovation potential, feasibility, expected productivity gains, and alignment with DX (digital transformation) or GX (green transformation) priorities.
Business Succession and M&A Subsidies:
Delivery: Managed by TOPPAN Co, acting as secretariat.
Application requirements: SMEs must submit a business plan describing how the investment (equipment, systems, or process innovation) will enhance productivity or competitiveness. Plans typically include cost breakdowns, projected productivity outcomes, and financial statements from the previous fiscal year.
Evaluation criteria: Innovation potential, feasibility, expected productivity gains, and alignment with DX (digital transformation) or GX (green transformation) priorities.
Budget
The budget for the programme was initially set at JPY 360 billion (around EUR 2.25 billion) for the 2019/2020 fiscal year and has been adjusted every year since, with available information citing the following:
2022/2023: JPY 200 billion
2023/2024: JPY 340 billion
In December 2025, it was announced the programme would be provided a supplementary budget of JPY 340 billion over the FY 2025/2026. In recent years, the programme has aimed to expand the scale of eligible enterprises and create companies with sales of JPY 10 billion (around EUR 56 million) by providing subsidies of up to JPY 500 million (around EUR 3 million) to growth‑oriented small and medium‑sized enterprises through the “SME Growth Acceleration Subsidy.”
Outreach
The programme’s outreach strategy is designed to reach SMEs across all regions of Japan, including micro enterprises and those in labour-intensive or traditionally low-productivity sectors. METI and the SME Agency rely on a network of local support organisations, including the Organisation for SMEs and Regional Innovation (SMRJ), Chambers of Commerce, and regional SME support centres, to disseminate information about available subsidies. These partners provide guidance on programme objectives, eligibility requirements, and application procedures, ensuring that even SMEs in remote areas or outside major industrial clusters are aware of opportunities.
Digital platforms play a key role in outreach. Public call information, application forms, guidance manuals, and explanatory videos are hosted on official websites such as SMRJ3 and METI4 portals. SMEs can also submit applications electronically through systems like the J-Grants portal5, and digital communications such as e-mail newsletters, webinars, and online consultations are used to increase accessibility. This approach reduces administrative barriers, allowing SMEs that may lack dedicated grant management teams to participate.
The programme also engages in targeted outreach to high-potential sectors and growth-oriented firms, for example those pursuing digital transformation, automation, or business succession. SME Agency staff and implementing agencies conduct workshops, industry seminars, and direct consultations to encourage applications from SMEs that meet strategic policy goals, such as productivity gains, regional revitalisation, and integration into global value chains. By combining nationwide visibility with focused engagement for priority firms and sectors, the outreach strategy aims to ensure broad participation while supporting Japan’s long-term productivity and competitiveness objectives.
Table 1 summarises information about the eligibility criteria and the estimated size of the grants.
As a relatively nascent, METI provided an ex-ante logic model for measuring the success of the programme which illustrates concrete which is monitored to determine annual productivity improvements among recipient SMEs, allowing for continuous analysis of the project’s effectiveness, as below:
Source: METI and Small and Medium Enterprise Agency (2022), Regarding Project to promote SMEs to upgrade their productivity. https://www.meti.go.jp/information_2/publicoffer/review2022/kokai/overview2.pdf
Despite limited evaluations, some preliminary insights by programmed have been collected6, as follows:
Manufacturing/Commerce/Service Subsidy: By September 2022, the commercialisation rate of supported projects was 68.6%, but the added value growth rate was slightly negative (-0.6%), indicating that it may take several more years for productivity and value-added impacts to materialise.
IT Implementation Subsidy: The subsidy has contributed to measurable improvements in labour productivity, with supported SMEs achieving a 3.4% increase in labour productivity during the early phase of implementation.
Overall evaluation status: The programme is still ongoing, so a comprehensive assessment has not yet been completed; however, early evaluations suggest that subsidies can enable project commercialisation and productivity gains, though impacts on value-added growth may take longer to appear.7
Integrate multiple support streams under one coherent productivity agenda: Japan’s programme bundles diverse subsidy schemes (for capital investment, IT adoption, market access, and business succession) under a single strategic framework.
Use local and sectoral intermediaries for delivery: Each Japanese subsidy is implemented by specialised intermediary organisations: national federations, chambers of commerce, and SME associations, that ensure outreach and legitimacy at the local level.
Tie diffusion funding to measurable productivity outcomes: Japan tracks results such as added value, wage growth, and labour productivity improvements for each subsidy stream, rather than focusing solely on R&D intensity or project counts.
Support gradual transformation through smaller, accessible grants: Japan’s model uses relatively small, easily accessible grants that encourage incremental innovation and practical digitalisation, particularly among micro- and small enterprises.
Link financial support with advisory and peer learning mechanisms: Japanese subsidies are backed by expert consultations, peer case sharing, and approved vendor systems, helping firms choose appropriate technologies and sustain changes post-grant.
Bring together existing fragmented diffusion initiatives (e.g. Made Smarter, Help to Grow, Innovate UK diffusion pilots) into a unified, easily navigable platform that addresses firms’ different stages of innovation readiness.
Empower regional intermediaries (Growth Hubs, Catapults, cluster bodies) to act as trusted “delivery nodes” for national diffusion programmes, linking advice and grants to local business ecosystems.
Build a performance-based monitoring framework that emphasises observable productivity and diffusion outcomes (e.g. process efficiency, digital adoption, exports), not just innovation inputs.
Complement high-tech innovation missions with micro-grants for applied innovation, ensuring inclusion of smaller firms and sectors that often lag in adopting productivity-enhancing technologies.
Pair funding with structured advisory and peer-learning programmes, leveraging universities, innovation agencies, and sector associations to provide tailored follow-up support and diffusion of good practice.
This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Member countries of the OECD.
This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
Photo credits: © Cover © Bardhok Ndoji/iStock by Getty Images Plus.
© OECD 2026
Attribution 4.0 International (CC BY 4.0)
This work is made available under the Creative Commons Attribution 4.0 International licence. By using this work, you accept to be bound by the terms of this licence (https://creativecommons.org/licenses/by/4.0/).
Attribution – you must cite the work.
Translations – you must cite the original work, identify changes to the original and add the following text: In the event of any discrepancy between the original work and the translation, only the text of original work should be considered valid.
Adaptations – you must cite the original work and add the following text: This is an adaptation of an original work by the OECD. The opinions expressed and arguments employed in this adaptation should not be reported as representing the official views of the OECD or of its Member countries.
Third-party material – the licence does not apply to third-party material in the work. If using such material, you are responsible for obtaining permission from the third party and for any claims of infringement.
You must not use the OECD logo, visual identity or cover image without express permission or suggest the OECD endorses your use of the work.
Any dispute arising under this licence shall be settled by arbitration in accordance with the Permanent Court of Arbitration (PCA) Arbitration Rules 2012. The seat of arbitration shall be Paris (France). The number of arbitrators shall be one.
← 1. Ministry of Economy, Trade, and Industry. (2021). Regarding the Small and Medium-sized Enterprise Productivity Revolution Project, https://www.meti.go.jp/information_2/publicoffer/review2021/kokai/overview5.pdf, Translated with Deepl Pro.
← 2. TOPPAN Co. is a Japanese global provider of integrated solutions of printing, communications, security packaging, etc. https://www.toppan.com/en/
← 6. Productivity Revolution Promotion Project (November 2022). Regarding the Small and Medium-sized Enterprise. https://www.gyoukaku.go.jp/review/aki/R04/img/4_2_1_keisan.pdf. Translated with Deepl Pro.
← 7. Asian Productivity Organization. (2025). SME Productivity and Innovation In Asia: Policies For A Resilient Future. SME-Productivity-and-Innovation-in-Asia_PUB.pdf, pages 98-99.
