New Delhi, Apr 18 (KNN) India is likely to initiate negotiations with Japan in the coming months to review their 2011 free trade agreement (FTA), formally known as the Comprehensive Economic Partnership Agreement (CEPA).

The primary objective for India is to address the persistent trade deficit it has faced with Japan since the implementation of the CEPA, reported Mint.

According to sources familiar with the matter, both India and Japan are open to reviewing the trade deal. India has long pursued a review, and the newly elected government aims to initiate negotiations within its first 100 days in office, considering it a priority issue

The CEPA, signed in 2011, provided duty-free and low-duty market access for most items between the two countries. However, the trade balance has largely favoured Japan, with India experiencing a significant trade deficit.

Indian exports to Japan have remained relatively stagnant, while Japanese exports to India have nearly doubled since 2010-11.

During the fiscal year 2022-23, India's imports from Japan stood at USD 16.50 billion, while its exports to Japan were only USD 5.47 billion, according to data from the Indian commerce ministry.

In the proposed review, India wants Japan to reconsider some non-tariff measures that have made it challenging for Indian companies and micro, small, and medium enterprises (MSMEs) to access the Japanese market.

Issues such as rules of origin (ROO) and product-specific rules (PSRs) will also be discussed during the negotiations.

Experts suggest that India's free trade agreements (FTAs) with ASEAN, South Korea, and Japan have led to a significant increase in trade deficits for India.

There are concerns that the proposed negotiations with Japan might not significantly boost India's exports due to the already low import duties in Japan, potentially leading to an increase in imports for India post-FTA.

(KNN Bureau)