Author: Rajaram Panda, IDSA, India

In a far-reaching strategic move, India and Japan signed the much-awaited comprehensive economic partnership agreement (CEPA) on 16 February. Under this agreement, India agreed to remove tariffs on 94 per cent of goods over the next 10 years. The deal will facilitate trade growth and enable both parties to reach the target of US$25 billion worth of bilateral trade by 2014 from its present US$10.3 billion. This deal has special significance. Barring a similar deal with Singapore and South Korea, this is the first trade deal India has signed with a major industrial country. Further, it will help India to fix its outstanding trade imbalance with Japan. Imports from Japan currently account for almost 60 per cent of India’s total trade.

After over a dozen rounds of negotiations, the agreement was finalised by Prime Minister Manmohan Singh and his Japanese counterpart Kan Naoto in October 2010. Read more…