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INDIA JAPAN COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT (CEPA)

Background The negotiations for India-Japan CEPA began in Yr. 2004 and came into effect on 1st August 2011. India-Japan CEPA is the third such agreement having concluded, the earlier ones being Singapore in 2005 and Korea in 2009. It is infact for the first time that India has signed a CEPA with any developd industrialized country. The agreement covers goods and services trade and also areas like investment, competition policy, intellectual property rights and government procurement.

Main features of CEPA are: The Agreement is most comprehensive of all the agreements concluded by India. so far as it covers more than 90% of trade, a vast gamut of services, investment, IPR, customs and other trade-related issues. Overall, about 94% of the tariffs between Japan and India will be eliminated within 10 years about 97% of tariffs will be eliminated by Japan on a trade value basis within 10 years. Japan agreed to eliminate almost all the tariffs on industrial products at the entering into force of this agreement. Under India Japan CEPA, Japan has put 87% of its tariff lines under immediate reduction of tariff to zero. A large number of these items are of India's export interest. Under the India- Japan CEPA only 17.4% of the tariff-lines have been offered for immediate reduction of tariff to zero % by India. Tariffs will be brought to zero in 10 years on 66.32% of tariff lines to give sufficient time to industry to adjust to the trade liberalization.

Indias schedule of tariff reductions In terms of granting market access opportunities, CEPA requires India to eliminate tariffs on 17.4% of its total tariff lines immediately after the agreement comes into effect. Within a period of 10 years, India would eliminate tariffs on nearly 86% of its tariff lines. Prominent product groups that have been excluded from the tariff elimination process are agricultural commodities and a sizeable proportion of the processed products, plastic products, several categories of non-electrical machinery, and auto and auto components. Among some of the steps that India is going to undertake is to reduce trade barriers and bring it to zero on auto parts, steel imports, electronics and machinery products gradually. India would also relax restrictions to single brand companies from Japan to

have controlling stakes of 51% in local companies or set up franchisees. However, India has decided not to give any leeway to Japan on government procurement. India has also refused to part with its sensitive sectors like agricultural goods, fruits and spices. Japans schedule of tariff reductions Japan has agreed to eliminate tariffs on 87% of its tariff lines immediately. Over the next decade, Japan would have removed import tariffs on nearly 97% of the tariff lines. Benefiting from the tariff elimination commitment made by Japan would be marine products, fruits, alcoholic beverages, and textile and clothing products. Many of these products have had higher tariffs in the past, thus impeding access to the Japanese market. Japan has agreed to remove import tariffs on food products like pepper and tea within the next decade while at the same time allowing 'commercial presence' of working professionals to set shop in Japan. This would give a big boost to Indian professionals like musicians, accountants, architects and business consultants. The two countries would negotiate on the possibility of allowing Indian nurses from working in Japan which has its bulk population in their 60's. India-Japan bilateral trade has raised quite insignificantly in the last few years. The total trade between the two countries has been around 10 billion USD for the last few years and has increased marginally to 13.82 billion in Yr. 2010-11. Japan which ranked 7th as a supplier of goods to Inida in Year 2001 has declined to 13th position in the current year. Similarly, India is not among the top supplier countries to Japan whereas many countries from the Asian region like China, Korea, Indonesia, Malaysia amd Thailand feature among the top 10 suppliers to Japan. Successful implementation of the India-Japan CEPA should, therefore, be seen as the much-needed fillip for setting CEPA in motion. Implications Comprehensive Economic Partnership Agreement (CEPA) with Japan will remove tariffs on 94% of goods over ten years. The deal is expected to boost bilateral trade between the two countries to $25 billion from $13.8 billion at present. India could be a net gainer because of increased FDI inflow from Japan post the deal. You may refer to link http://commerce.nic.in/trade/IJCEPA_Basic_Agreement.pdf for detailed agreement and for schedule of Tariffs by both the countries. Customs duties on originating goods classified under the tariff lines indicated with A in Japan Schedule for India has been eliminated, as from the date of entry into force of the India Japan CEPA Agreement.

Please find below the list of major engineering items on which the tariffs has been brought to ZERO from the date of enforcement of this agreement i.e. w.e.f. 1st August 2011.

Engineering Items of Category A in Japans Tariff Schedule for India Engineering Product Tariff Rate w.e.f 1st August 2011 ZERO ZERO ZERO ZERO ZERO

Mica, including splittings; mica waste. Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, ridingcrops and parts thereof Articles of stone, plaster, cement, asbestos, mica or similar materials Pig iron and spiegeleisen in pigs, blocks or other primary forms. Ferrous products obtained by direct reduction of iron ore and other spongy ferrous products, in lumps, pellets or similar forms; iron having a minimum purity by weight of 99.94%, in lumps, pellets or similar forms. Ferrous waste and scrap Granules and powders, of pig iron, spiegeleisen, iron or Steel, Iron and non-alloy steel in ingots or other primary forms Semi-finished products of iron or non-alloy steel. Flat-rolled products of iron or non-alloy steel, Bars and rods, hot-rolled, in irregularly wound coils, of iron or non-alloy steel Angles, shapes and sections of iron or non-alloy steel. Wire of iron or non-alloy steel. Stainless steel in ingots or other primary forms; semi finished products of stainless steel. Flat-rolled products of stainless steel, Bars and rods, angles, shapes, Sections, wires of stainless steel. Other alloy steel in ingots or other primary forms; semi finished products of other alloy steel. Flat-rolled products of other alloy steel, Bars and rods, hot-rolled, in irregularly wound coils, wire of other alloy steel. Articles of iron or steel Copper-zinc base alloys (brass), (bronze) Copper waste and scrap, alloys of copper, Copper powders and flakes, Copper bars, rods and profiles, Copper wire, Copper plates, sheets and strip, of a thickness exceeding 0.15 mm, Copper foil, Copper tubes and pipes, Copper tube or pipe, Stranded wire, cables, plaited bands and the like, of copper, not electrically insulated. Nails, tacks, drawing pins, staples (other than those of heading 83.05) and similar articles, of copper or of iron or steel with heads of copper; screws, bolts, nuts, screw hooks, rivets, cotters, cotter-pins, washers

ZERO ZERO ZERO ZERO ZERO ZERO ZERO ZERO ZERO ZERO ZERO

ZERO ZERO

ZERO

and similar articles, of copper Table, kitchen or other household articles and parts thereof, of copper; pot scourers and scouring or polishing pads, gloves and the like, of copper; sanitary ware and parts thereof, of copper and Other articles of copper. Nickel and articles thereof Aluminium and articles thereof Lead waste and scrap, Lead plates, sheets, strip and foil; lead powders and flakes and Other articles of lead. Zinc waste and scrap, Zinc dust, powders and flakes, Zinc bars, rods, profiles and wire, Zinc plates, sheets, strip and foil & Other articles of zinc. Tin and articles thereof Other base metals; cermets; articles thereof Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal, Miscellaneous articles of base metal Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof Aircraft, spacecraft, and parts thereof Ships, boats and floating structures Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof Clocks and watches and parts thereof Musical instruments; parts and accessories of such articles Arms and ammunition; parts and accessories thereof Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings 94.01 Seats (other than those of heading 94.02), whether or not convertible into beds, and parts thereof. Medical, surgical, dental or veterinary furniture (for example, operating tables, examination tables, hospital beds with mechanical fittings, dentists chairs); barbers chairs and similar chairs, having rotating as well as both reclining and elevating movements; parts of the foregoing articles. Mattress supports; articles of bedding and similar furnishing (for

ZERO

ZERO ZERO ZERO ZERO

ZERO ZERO ZERO ZERO

ZERO

ZERO ZERO ZERO ZERO

ZERO ZERO ZERO ZERO

ZERO

ZERO

example, mattresses, quilts, eiderdowns, cushions, pouffes and pillows) fitted with springs or stuffed or internally fitted with any material or of cellular rubber or plastics, whether or not covered.

Services Under India-Japan CEPA, Indian professionals will be able to provide their services and contribute towards further development of Japan's IT Sector. Japanese side has also agreed to conclude Social Security Agreement within a specified period (3 years). The agreement under the service sector includes the following independent professionals: Accounting, R& D Services, Tourist Guide, Market Research; and Management Consulting firms now can provide services in Japan.

Under the India-Japan CEPA, India will be benefited by Japanese investments, technology and world-class management practices that come with it. Japan can take advantage of Indias huge and growing market and resources, especially its human resources. CEPA will facilitate more investment flow from Japan to India as it provides an atmosphere conducive for Japanese companies to establish their manufacturing base in India. Contractual Service Suppliers (CSS), Independent Professionals (IPs) such as Accounting, R& D Services, Tourist Guide, Market Research; and Management Consulting firms now can provide services in Japan. The Japanese side has agreed to consider opening the market for nurses and caregivers for India.

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