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Textiles, pharma sectors to gain most from trade pact with Japan

17 Feb 2011 Evaluate

India and Japan, with a combined GDP of around $7 trillion, inked a Comprehensive Economic Partnership Agreement (CEPA) to liberalize their markets and boost not only their bilateral trade in goods and services but also investments. The move comes at a time when India-Japan trade had fallen in 2009-10 by 5 per cent to $10.36 billion from $10.91 billion in 2008-09. Trade balance has been in Japan's favour with India imports being $6.7 billion and exports only at $3.6 billion in 2009-10.

The pact covers around 90 per cent of India's tariff lines of around 12,000 lines and about 95 per cent of Japan's 9,000 tariff lines. The agreement will result in elimination of tariffs in these items within 10 years of the pact coming into force.

The sectors in India that would gain the most from the CEPA are textiles (they will immediately get duty-free access to the Japanese market) and pharmaceuticals. Indian pharmaceuticals will get access to a highly developed Japanese market and for the first time ever Japan has committed to give the same treatment for Indian generics (off-patent drugs) as their domestic industry. Among those imports from Japan that will be duty-free immediately after the pact is implemented are SIM and memory cards, electronics-indicator panels of LCDs and LEDs, calculators and battery chargers.
 

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