The announcement was made in Tokyo during the visit of Indian External Affairs Minister Salman Khurshid for the 7th India-Japan Strategic Dialogue.
"We hope to deepen and develop a strategic and global partnership (with India) by building a close cooperative relationship," Japanese Foreign Minister Fumio Kishida said after his meeting with Khurshid, the Press Trust of India news agency reported.
The 220.4 billion yen ($2.32 billion) will go for four projects including the Delhi-Mumbai industrial corridor, the Daily Yomiuri reported.
The report quoted Khurshid as saying he hoped that bilateral negotiations to conclude an agreement on peaceful nuclear energy cooperation would move forward. The talks had stalled after Japan's March 11, 2011 Fukushima-Daiichi nuclear plant crisis.
The report said Kishida and Khurshid also agreed to reinforce maritime security cooperation between the two countries.
In a speech at Tokyo's Rikkyo University, Khurshid said India-Japan economic engagement has expanded significantly since the two sides established their Strategic and Global Partnership in 2006, the Indian government website reported.
"We are delighted that India continues to poll very high amongst Japanese firms as a long term investment destination," he said. "The number of firms from your country which have operations in India is over 1,000 now, and while we can take some satisfaction from this fact, naturally we want many more of your firms to invest in India."
He said India a labor abundant country with relatively low wage rates, while Japan is abundant in capital and has technology and management expertise, "which can be married to our competitive advantages."
Khurshid said India plans to invest about $1 trillion in infrastructure in the next four years.