For OPERATION C the Navy actually proposed an invasion of Ceylon, the Army essentially didn't return their phone calls. That's why OP C was nothing more than a glorified raid that did some damage and sank some ships and embarrassed the British but otherwise wasn't worth the fuel they used or pilots they lost.
Careful, or you will summon Glenn239 from the depths!
It's not even
impossible the Japanese could have taken Ceylon, or at any rate much of it, with some lucky breaks. For a little while, at least. But the Army wasn't wrong to think that it would be a drug-addled exercise to try it, and hope that the salesman would just go away if they didn't answer the door.
The real problem is, looking at the major strategic possibilities beyond the new perimeter was a grim list for the Japanese:
1. Soviet Far East: The Army had had more than it could take after
Khalkhin Gol, and little appetite to try more; the IJN would be of very limited help, beyond assisting in taking major Soviet ports. Meanwhile, the US Navy is gestating an avalanche of steel with a late 1943 due date.
2. China: Kwangtung Army was already doing all that could be done; the Navy would be useless here anyway.
3. India/Ceylon: Pretty robustly defended, with tough terrain, and again, the IJN could only help with Ceylon, at heavy risk. The Army wanted no part of it. The only hope here was a general Indian uprising, which never seemed to happen.
4. Australia: A logistic nightmare, and any beachhead established at Darwin would quickly amount to the world's largest self-administered POW camp, with the added bonus of a hundred indigenous species that that like to feast on human flesh. The Army wanted no part of it.
5. Alaska: Horrible weather and terrain, little local infrastructure or resources (beyond seafood and timber), and even without the Alcan, the Americans and Canadians can get troops up there more quickly than you can if you actually manage to seize a beachhead on the mainland. The Army wanted no part of it.
6. Oahu: You might as well try Sealion.
So basically, the only thing left is Melanesia. It looks less bad (and more politically sell-able) than any other option, and has the most possibilties for Navy participation. And, indeed, this seems to have been the IJN staff's conclusion. Problem is, it turns out that it's
also awfully damned hard, and its key islands are already too well defended for the available army troops, logistics, and IJN air power to tackle, save possibly for outlying garrisons (though I think even Efate and Espiritu Santo would have been butcher houses even if unreinforced by Nimitz - pyrrhic victories, even if the Japanese prevail).