India Japan Sign Trade Pact

90% of Lines Covered Zero Duty in 10 years

The Japanese government said Tuesday that it would sign a free trade agreement with India that would abolish duties on more than 90 per cent of trade for 10 years.

Foreign Minister Seiji Maehara and Indian Commerce and Industry Minister Anand Sharma were to conclude the accord on Wednesday, officials said, reports IANS.

The deal would eliminate tariffs on 90 per cent of Japanese exports to India, such as auto parts and electric appliances, and 97 per cent of imports from India, including agricultural and fisheries products, until 2021. Rice is, however, out of the agreement with Japan firm on its high tariff and NTBs.

Analysts say that closer commercial ties with New Delhi may pave the way for Japanese investment in rare-earth resources, which are used in a variety of high tech products from iPads to solar panels. Japan has been actively seeking new supply sources after China, which accounts for roughly 97 percent of the global supply of the metals, cut exports last year. Although the agreement does not directly cover rare earths, the Japanese foreign ministry said it could make it easier for Japanese companies to invest in resource development in India.

“India is a very big market and sharply growing,” Trade Minister Banri Kaieda told a news conference.

“With the accord, the government can support Japanese firms doing business in India, which seeks infrastructure technologies from Japan.”

Japan and India are also to continue talks on lifting employment restrictions to allow Indians to work in Japan as nurses and care givers.

Japan, which is bracing itself for increasing health care requirements as its population ages, hopes to conclude the talks within two years, the government said.

Anand Sharma, Union Minister of Commerce and Industry and Japanese Foreign Minister, Mr. Seiji Maehara signed the Comprehensive Economic Partnership Agreement (CEPA) between India and Japan on 16 February 2011 covering goods, services and investment. In this Agreement 90% of Indian tariff lines are covered while Japan has covered 5% more lines than India.

Sensitive sectors for India are fully protected including agriculture, fruits, spices, wheat, basmati rice, edible oils, wines and spirits and also certain categories of industrial products such as auto and auto parts.

Japan has committed to give the same treatment for Indian generics as their domestic industry. Apart from this, Indian agricultural produce including instant tea and seafood will find their way in the Japanese market. The textile products including readymade garments will gain market access. The Japanese side have also lowered their tariffs for petrochemicals and chemical products, jewellery and cement.

In the services sector India has obtained conside-rable concessions including commit-ments for providing greater access for contractual supp-liers, professionals such as account-ants, researchers, tourist guides and management consultants who will now be able to provide their services in Japan. Japan has also committed to cover not only computer engineers but whole range of engineering services such as mechanical, electrical, construction, industrial, design engineers and project management specialists. For the first time ever, Japan has agreed to grant additional category of instructors for yoga practitioners, classical musical and dance practitioners, chefs and English language teachers. The negotiations are also on for creating greater openings for Indian nurses and care givers. For bilateral investment, India has committed to the current national policy on foreign investment and this signals the greater participation of Japanese investors into Indian economy. Similarly the Agreement also covers intellectual property rights for the first time and the parameters of our commitments on these are circumscribed by national legislation and agreement in TRIPs.

In his meeting with Foreign Minister Maehara, Indian Commerce Minister Sharma set a target of doubling bilateral trade to US $ 25 billion by 2014 and reiterated his suggestion of establishment a Joint Revolving Fund of US $ 9 billion for kick starting the Delhi-Mumbai Industrial Corridor Project.

Mr. Sharma also addressed CEOs from India and Japan at a business event organized jointly by CII and Nippon Keidanren.