Indo-Japanese Comprehensive Economic Partnership Agreement (CEPA)- A Tool of Strengthening Bilateral Trade Relations

Abstract––The present paper attempts to portray the bilateral benefits to be shared by partnering countries through bilateral trade agreements in the backdrop of Indo-Japan Comprehensive Economic Partnership Agreement. While WTO endeavors to bring order, justice and equity in world trade, the bilateral trade pacts between the countries help in building people- to people relationship in both the countries, while sharing enormous political, social and economic gains. Indo-Japanese Trade Pact assumes greater significance than ever before in the times of changing global economic order. Japan gives 30 per cent of its foreign aid to India and is committing more than US $ 4 billion to the Delhi-Mumbai Industrial Corridor (DMIC). Indian exports to Japan in 2006-07 were US $ 2812.83 million while imports from Japan were to the tune of US $ 4560.84 million. The factors like higher growth rates and expanding markets in India, rising costs and wage rates in China are attracting Japan to look towards India, while growing access in Japan benefit Indian firms in textile, pharmaceutical, Jems and Jewlleries, leather goods sectors. The CEPA is expected to more than double bilateral trade from $12 billion to $ 25 billion by 2014. Japanese companies have been eyeing the Indian market with greater interest, especially in the capital goods sector. A recent survey of over 600 Japanese companies indicated that 75 per cent looked upon India favourably as an investment destination (compared to 72 per cent for China). There are various bottlenecks in the implementation of the pact, like Rules of origin, a 15 per cent withholding tax, implementation process of SPS norms in Japan. While the investment environment and physical infrastructure still needs to be a lot mor