India-Japan Comprehensive Economic Partnership Agreement (CEPA)

Slide 1

 India Japan CEPA was signed in February 2011

 Japan was identified as “an important source of both investment and technology”
 A Joint Study Group was formulated to suggest ways to uplift the bilateral economic ties. It
highlighted complimentary capabilities of India in software and Japan in IT hardware
 It also identified complementarity between India and Japan since India is a major producer
of agricultural products and Japan imports more than 50% of its food
 The agreement classified goods traded between the two countries into seven categories as
A, B5, B7, B10, B15, Pa/Pb and X.
 As a result of the CEPA, India reduced around 17.4 % of the tariff lines to 0% while Japan
reduced 87% of its tariff lines to 0%
 Both the countries also granted The Most Favoured Nation status to each other’s investors
Analysis of India Japan CEPA

Slide - 2

India‐Japan Bilateral Trade

20000
18,512.35
18000 17,634.37
16,294.82
18,327.97 15,707.57
16000
14,513.07
13 ,723.27
15,516.93
14000
12,412.29 13,600.37
12000 10,911.97
10,184.40 10,363.72 12,772.64
11,999.43 9,850.22
10000 10,973.35 Export
9,480.75 10,131.36 9,754.64
7,886.27 Import
8000 8,632.03
6,100.06 Total Trade
6000 6,734.18 6,814.07 4,734.22
6,325.926,328.54
4000 3,858.48 5,385.57
5,091.24 4,861.73
4,662.85
3,629.54 3,845.73
2000 3,025 .70
0
0

 In 2019-2020(Apr-Jan), India’s total trade with Japan was $14,416.62 with exports worth
$3819.74 and imports worth $10,596.88
 Slide -3

 A 2018 survey conducted by JBIC suggests that India maintains the second most favoured
destination by the Japanese investors in the medium term followed by China
Interestingly, when it comes to “long term” investment destination, India becomes the top
most destination surpassing China
 Japan’s FDI in India in 2019 was $2965 and it is among top 10 investors in India
 Slide -4

CONCLUSION

 India’s competition with ASEAN countries in attracting Japanese FDI. Corporate Tax Rate
this is less attractive than some of the ASEAN countries
 India should overcome NTB placed by Japan via SPS measures
 India can request Japan for a preferential treatment under CEPA and take advantage of
the New Guest Worker program
 Japan’s shortage of IT workers and engineers, could be filled by India