The much-awaited Comprehensive Economic Partnership Agreement (CEPA) between India and Japan would be inked on Wednesday.

A statement by the Japanese Ministry of Economy, Trade and Industry said the Japanese Government decided at its Cabinet Meeting on Tuesday to sign the CEPA between Japan and India.

It added that based on this decision, Mr Seiji Maehara, Japanese Minister for Foreign Affairs, and Mr Anand Sharma, the Minister of Commerce and Industry, will sign the CEPA and its Implementing Agreement during their meeting in Tokyo on Wednesday.

“It is expected that this agreement will promote the liberalisation and facilitation of trade and investment between the two countries and will further vitalise both economies by strengthening reciprocal economic ties in wide-ranging fields,” the statement said.

The CEPA is to boost the bilateral trade in goods and services as well as investments between India (with GDP of around $1.4 trillion) and Japan (the world's third largest economy with GDP of around $5.47 trillion).

In 2009-10, India-Japan trade had fallen by 5 per cent to $10.36 billion from $10.91 billion in 2008-09.

The CEPA with India, which is the second fastest growing major economy (after China) with an 8-8.5 per cent growth rate, is also expected to give a push to the stagnating Japanese economy. The negotiations for the pact were spread over three years and 14 rounds of talks.

The pact was finalised in October 2010, during the Prime Minister Dr Manmohan Singh's visit to Tokyo.

To India's advantage, New Delhi has not committed anything regarding contentious issues such as competition policy, Government procurement and coverage of Intellectual Property Rights beyond the WTO's TRIPS agreement.

The sectors in India that would gain the most from the CEPA are textiles (it will get duty-free access to the Japanese market), marine items and pharmaceuticals. Significantly, the pact will result in Indian pharmaceutical products, including generic drugs, getting easier entry into the strictly regulated Japanese market.

The agreement would cover 87 per cent of India's tariff lines of around 12,000 lines and 93 per cent of Japan's 9,000 tariff lines.

On the date of signing of the CEPA, the duties of about 80 per cent of Japan's tariff lines will be eliminated, while the duties of only around 25 per cent (all of this in textiles sector) of India's tariff lines will be brought down to zero. Duties on 75 per cent of India's tariff lines will be removed only over a period of 10 years.

Negative list

India's negative list (items outside the ambit of duty cuts) has 658 items, including from sensitive sectors such as auto, agriculture and chemicals. Japan's negative list has 400 items, mostly from the agriculture and leather sector.

In the services sector, the CEPA will facilitate easier entry into Japan for Indian financial and legal professionals, yoga instructors, chefs, dance masters, English teachers, IT workers, engineers, accountants, architects, nurses and caregivers.

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