Tap Japan pact to cut trade deficit, says Sitharaman

The CEPA has recently been under review with India raising the issue of greater market access for marine products and pharmaceuticals

Indian firms should leverage its trade pact with Japan to increase exports and bridge the widening trade deficit, Commerce and Industry Minister Nirmala Sitharaman said on Thursday.

Coming into force in 2011, the Comprehensive Economic Partnership Agreement (CEPA) is one of the most comprehensive pacts India has signed.

It covers a diverse set of areas apart from merchandise trade, including services, rules of origin, intellectual property rights, government procurement and customs procedure.

This had pushed up bilateral trade between the nations from $10.4 billion in 2010 to $14.5 billion now.

However, India’s trade deficit with Japan had soared from $3.1 billion in the pre-CEPA period to $5.2 billion, Sitharaman said at a seminar organised by policy think tank Research and Information System for Developing countries.

The CEPA is under review, with India raising the issue of greater market access for marine products and pharmaceuticals.

Also, the commerce ministry had said in spite of an increase in work visas issued by Japan, the market share of Indian Information technology companies in Japan was considered below potential.

However, the government has asked domestic industry to step up efforts to use the treaty to boost trade. “The share of Indian companies in Japanese drug market continues to be low and it is limited only to Active Pharmaceutical Ingredients,” Sitharaman said.

A decision by Japan to switch over to a higher share of generic medicines was seen as a potential opportunity for the Indian industry, which is strong in generics.

The Japanese government's recent decision to attain an 80 per cent share of generic medicines by 2018, is expected to provide a vast untapped potential to the internationally acclaimed generic drug industry in India. Tokyo is also looking to cut down on its increasing health care costs on account of its aging population.

On IT exports to the country, Sitharaman said trade remains very low at $ 1 billion.

TRADE WITH LAND OF RISING SUN

• Exports falling in spite of Japan trade deal
   
• India & Japan signed Comprehensive Economic Partnership Agreement in 2011
   
• Pact covers merchandise goods, services, rules of origin, IPR, government procurement, customs procedure