India-japan free trade deal likely to be reviewed soon
The trade balance has been mostly in favour of Japan since the treaty was signed in 2011
New Delhi: India has put the Navy on high alert to respond quickly to calls of distress from ships, both Indian and foreign flag carriers, moving through the strife-torn Persian Gulf region, where tensions have escalated since Iran launched a missile strike against Israel on Saturday.
India’s 2011 free trade deal (FTA) with Japan is likely to be reviewed in the coming months, with New Delhi keen to minimize the trade deficit with Tokyo, two people aware of the matter said. While India is working on initiating negotiations with Japan for a review of the deal, called a comprehensive economic partnership agreement (Cepa), the Japanese are also open to a review, one of the persons mentioned above said, requesting anonymity.
“Trade between both the nations is on the track. Certain issues need to be reviewed and it will be done by sitting across the table during negotiations,” the person mentioned above said.
“The plan is to review the Cepa soon, possibly within the first 100 days of the new government coming into power, as it is a priority,” the person added.
India has long pursued its demand for a review. In July 2023, commerce and industry minister Piyush Goyal said India has asked Japan and South Korea to renegotiate the respective trade deals to make trade more balanced and equitable.
However, the two reviews are yet to take place.
India and Japan signed the Cepa in 2011, which extended duty-free and lowduty market access for most items for both countries.
However, the trade balance has been mostly in favour of Japan since then, with India seeing a higher trade deficit than its East Asian counterpart. Indian
INDIA is working on initiating talks with Japan for a review of the deal, called Cepa
JAPANESE are also open to a review of the deal, and certain issues need to be discussed, it is learnt
exports to Japan, in value terms, are much lower than Japanese exports to India.
During FY23, India’s imports from Japan stood at $16.50 billion, while
Indian exports to Japan stood at $5.47 billion, according to commerce ministry data.
Japan’s exports to India have doubled since 2010-11, when it stood at $8.62 billion,
INDIA and Japan signed Cepa in 2011, to extend duty-free/ low-duty market access
“Among other things, the Indian side wants the Japanese side to relook at some of the non-tariff measures, which have made it tough for Indian companies and MSMES,” the person mentioned above said.
Issues like rules of origin (ROO) and product-specific rules (PSRS) will be discussed in the review, the person added.
Product Specific Rules (PSRS) determine the circumstances in which goods imported from a country, having components or inputs from a third country, are still eligible for preferential tariffs.
According to the World Trade Organization (WTO), rules of origin are needed to determine the national source of a product. “There is wide variation in the practice of governments with regard to the rules of origin,” it said.
“While the requirement of substantial transformation is universally recognized, some governments apply the criterion of change of tariff classification, others the ad valorem percentage criterion and yet others the criterion of manufacturing or processing operation,” it added.
India’s FTAS with the Asean, South Korea and Japan have led to a significant increase in trade deficit for New Delhi, said Ajay Srivastava, founder of the trade think-tank GTRI.
Theproposednegotiationsmight not significantly increase India’s exports due to the low import duties in partner countries, potentially resulting in India importing more post-fta, he said.
dhirendra.kumar@livemint.com
IN FY23, India’s imports from Japan stood at $16.50 bn, and exports to Japan stood at $5.47 bn
while India’s exports to Japan have largely remained static.
The commerce ministry spokesperson and the commerce secretary’s office didn’t respond to emailed queries.