India-Japan FTA to be inked in Jan; implemented in Apr

India's garment exports, which are mostly directed towards the US and Europe may get big market in Japan, as the two countries are set to sign the free trade agreement (FTA) in January.

The Comprehensive Economic Partnership Agreement (CEPA) is expected to come into force from April, an official told PTI.

"Japan needs an approval from Diet (Parliament) Committee of Legislation for the agreement, which they will get soon. India is ready with all the approvals. In January, it (FTA) will be signed," he said.

The CEPA will reduce or eliminate tariffs on over 90 per cent of the $10.4 billion bilateral trade in merchandise.

"The new financial year of both the countries starts from April, 1, so most likely it will come into force from that date," the official said.

Indian exporters from the sector like cotton, textile, readymade garments, marine products will be benefited more, while Japanese exporters would gain in areas such as electronics, project imports and transport equipment, the official added.

Negotiations on the CEPA or a free trade agreement, was concluded during Prime Minister Manmohan Singh's visit to Tokyo last month.

The CEPA relaxes barriers on trade in goods, investment, trade in services and movement of professionals, competition and improvement of the business environment by both sides, besides enhanced cooperation on protection of intellectual property.

As the pact is all encompassing, India would like increased investments from Japan and easy access for its professionals in areas like IT, healthcare and food and restaurants.

While India has emerged as one of the favoured destination for foreign investors, foreign direct inflows (FDI) inflows from Japan remained small. Japanese FDI in the country was only $4.2 billion out of cumulative $121 billion since 2000.

India has already operationalised comprehensive pacts with South Korea and Singapore and in final stage of negotiations with the European Union.