India Eyes Expanded Economic Pact with Japan, CEPA Review Underway

India is prepared to broaden its economic engagement with Japan, announced Commerce and Industry Minister Piyush Goyal. Both nations are currently considering a review of their 15-year-old Comprehensive Economic Partnership Agreement (CEPA).

Speaking in Nagoya, Japan, Minister Goyal emphasized the need to update this trade pact. This modernization aims to reflect the evolving dynamics of bilateral trade and investment between the two countries.

Strengthening Japanese Presence in India

Major Japanese companies have shown keen interest in expanding their operations within India. India supports Japan’s ambition to double the number of Japanese firms in the country from the current 1,580.

Minister Goyal acknowledged past hurdles for Japanese businesses, including FDI restrictions, complex systems, and legal challenges. However, he highlighted India’s decade-long reforms to improve ease of doing business and liberalize foreign investment across sectors.

Key Investment Figures

• An investment target of $70 billion was set for India.
• Out of this, $10 billion has already been invested within ten months.
• These investments could potentially generate projects worth Rs 25-30 lakh crore.

Navigating Trade and Investment Flows

Discussions also touched upon the India-Japan trade deficit, with Goyal suggesting a focus on the types of goods traded for a proper assessment. Japan is ready to invest in India, and India is actively facilitating these investments.

Both nations, along with others, are exploring co-investment opportunities in third countries. This collaborative approach seeks to leverage shared economic interests beyond their direct bilateral relationship.

Boosting Indian Exports to Japan

Indian industries, particularly textiles, are now showing increased proactivity in the Japanese market, a shift from previous insufficient interest. An example includes a meeting where the chairman of Uniqlo expressed strong interest in sourcing from India.

Challenges like Japan’s stringent food regulations were recognized as non-tariff barriers, which India respects. The Indian government encourages its industries to identify and share difficulties in Japan, including language and process-related issues, with the Export Promotion Mission offering support.

Furthermore, the pharmaceutical sector is being urged to expand its global footprint. This involves registering Indian companies in various international markets to enhance their presence and reach.