Comprehensive Economic Partnership Agreement(CEPA)between India and Japan comes into force

Indian professionals and producers of textiles, pharmaceuticals and a number of other goods are set to make strong gains as India and Japan begin to implement aComprehensive Economic Partnership Agreement (CEPA) from Monday. The pact seeks to abolish import duties on most products, increase access for Indian professionals and contractual service suppliers to the Japanese market and liberalise investment rules. 

The CEPA will bring immediate gains to exporters of textiles, seafood and spices to Japan as duties on these products would be eliminated from the first day, according to an official release. It would ultimately result in removal of duties on almost 90% of products traded between the two countries. Other sectors that would gain from the CEPA through lower duties include agricultural products such as mangoes, citrus fruit, spices, instant tea, most spirits, petrochemical & chemical products, cement and jewellery. 

The CEPA signed in February this year is expected to boost trade to $25 billion by 2014 from $10.36 billion in 2009-10. While the Indian automobile and automobile parts industry have been largely shielded from tariff cuts by their inclusion in the negative list of items, India has agreed to reduce tariffs on auto parts made of steel, which is a major gain for the Japanese industry, a Japanese government official said. Japan will also be able to export consumer durables, such as electronics cheaper, to India, but tariff reduction by India will happen in phases over 10 years. The Indian textile industry is a major gainer as Japan has tariffs as high as 15% on the item compared to its average import tariff of below 5%. 

From Monday, Indian textile exporters can sell to Japan at 0% duty, gaining an edge over other competing countries. The pharmaceutical industry, too, is expected to make tangible gains as Japan has agreed to extend it national treatment which would result in a major drop in the time required for registration. Benefits would, however, be much bigger for the services sector with Japan agreeing to liberalise temporary movement of yoga instructors, classical music and dance exponents, English language teachers and Indian cuisine masters. 

Contractual service suppliers (CSS), independent professionals, such as accountants, R&D service providers, tourist guides, market researchers and management consulting firms, now can provide services in Japan. The Japanese side has also agreed to consider opening the market for nurses and caregivers for India. Japan's major gain is in investments, as India has agreed to give national treatment to both preand post-investment from that country, a benefit extended only to Singapore so far.

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