BTA Gains to India Elusive in Japan Trade Deal

Narendra Modi visited Japan in 2014 to elevate the bilateral partnership between the two countries to the status of special strategic and global partnership.

Comprehensive Economic Partnership Agreement i.e. CEPA between India and Japan came into force on 1st August, 2011 and is one of the most comprehensive agreements concluded by India. Bilateral trade between India and Japan pre-CEPA in 2010 was 10.4 USD billion and currently in 2016 stands at 14.5 USD billion. However, trade deficit of India with respect to Japan has also increased from 3.1 USD billion pre CEPA to 5.2 USD billion post CEPA

Japanese pharmaceutical market offers a huge untapped potential for Indian pharma industry. India’s strength in Pharma sector is well established. Government of Japan wants a 80 % share of generic medicines by 2018, which provides an opportunity for the generic drug industry of India. However, the share of India in the Japanese drug market continues to be below par and limited mostly to API’s.

Implementation issues of CEPA

Japan accorded a preferential tariff of 1.9 % as against an MFN rate of 3.5 % to Fish Surimi from India. However, as per the requirement to preserve the protein content during storage, a negligible amount of Cryo-protectant called TSPP is applied to the fish. Though the value of the TSPP is less than half a per cent of the overall cost of the product, the interpretation under rules of origin provides the excuse for denial of CEPA benefits on the grounds that the ‘Product is not of Indian origin’.