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India - Japan Comprehensive Economic Partnership Agreement
On 1 August 2011 - The CEPA came into force. The agreement covers trade in goods but also trade in services; with the aim of reducing or eliminating tariffs over the next ten years on over 90 percent of goods traded between India and Japan. Taxand India discusses the impact and significance of the agreement.
Impact of reduced import tariff rates on goods:
- Japan has scrapped import duties on 87 percent of goods that it imports from India with immediate effect while India has dropped tariffs on 17.4 percent of goods that it would import from Japan
A large number of the 87 percent items are of India's export interest eg. seafood, agricultural products such as mangoes, citrus fruits, spices, instant tea, most spirits such as rum, whiskies, vodka etc., textile products such as woven fabrics, yarns, synthetic yarn, readymade garments, petrochemical and chemicals products, cement, jewellery, etc.
The Agreement will thus, bring immediate gains to Indian exporters of textiles, seafood and spices to Japan as duties on these products would be eliminated from the first day. Furthermore, as seen in the customs notification, India has offered only 17.4 percent of their tariff-lines of goods for immediate reduction of tariff to zero percent
Tariffs will eventually be brought to zero over ten years on 66.32 percent of tariff-lines. This will give sufficient time to the industry to adjust to the trade liberalisation
India-Japan CEPA is an important step towards economic and trade cooperation between the two economies. The Agreement is comprehensive in nature and will further strengthen India-Japan economic ties. This agreement will also facilitate important joint initiatives like development of the Delhi- Mumbai Industrial Corridor. India will get access to Japanese investments, technology and management practices while Japan will be able to tap into India's growing market and skilled human resources.
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