Japan and India have signed a bilateral free trade agreement that would abolish duties on more than 90 per cent of trade for ten years.
The bilateral free trade agreement between Japan and India would abolish duties on more than 90 percent of trade
The Japanese government said the deal would eliminate tariffs on 90 percent of Japanese exports to India, such as electric appliances, and 97 percent of imports from India until 2021.
The deal would give smaller companies and public-private partnerships better access to infrastructure development projects
Japanese Foreign Minister, Seiji Maehara, and Indian Commerce and Industry Minister, Anand Sharma, signed the pact in a ceremony in Tokyo on Wednesday. The pact would "promote a strategic partnership between the two countries so that they can establish win-win relations and achieve growth," says Maehara.
For India, the pact would "provide an overarching framework to promote our economic cooperation, both trade and investment," says Sharma. He adds: "It will be rewarding for both India and Japan."
What the deal allows
The deal also allows Japanese companies to control stakes in Indian entities and to set up franchises in India. It keeps Japanese barriers in place for rice, wheat and dairy to protect its own farmers.
Indian mining, fisheries and some agricultural products are to have their tariffs lifted. India will maintain tariffs on assembled vehicles to protect its car industry, but will gradually reduce trade barriers on auto parts.
The deal would "facilitate new business opportunities," says Vikram Kirloskar, vice chairman of Toyota Kirloskar Motor Pvt Ltd. - a joint venture between Japan's Toyota Motor Corp. and India's Kirloskar Group to make and sell Toyota cars in India.
The deal would "facilitate new business opportunities," says Vikram Kirloskar (left)
Facilitating new opportunities
The deal comes as the world's largest automaker, Toyota, celebrates the opening of an auto plant in a rural area of Japan, which promises to grow into a new production point. It is the first Japan opening for a Toyota plant in 18 years.
Kirloskar says he hopes to see increased cooperation in sectors like manufacturing infrastructure, green technologies, energy and education. In particular, the deal would give smaller companies and public-private partnerships better access to infrastructure development projects.
Deal is a "welcome move"
The business communities, who have been waiting for the deal since negotiations started in January 2007, welcome the signing. Tadashi Okamura, chairman of the Japan Chamber of Commerce and Industry, says the agreement "would develop mutually complementary relationship."
"We expect India's market to expand rapidly hereafter," says Okamura. "Our challenge is how Japan's corporations could respond to the demand increase."
Japan and India also aim to lift employment restrictions to allow Indians to work in Japan as nurses and care givers
Japan and India are also to continue talks on lifting employment restrictions to allow Indians to work in Japan as nurses and care givers. Japan is bracing itself for increasing health care requirements as its population ages. Japan is one of the world's most rapidly aging countries, and there are concerns about caring for their growing number. The Japanese government said it hopes to conclude the talks within two years.
India is the 12th country to sign a free trade agreement with Japan, and the largest by economy so far. Despite the size of their economies, Japan and India have had limited trade, totalling about US$ 15 billion in 2010, just one percent of Japan's global trade.
Delhi has free trade deals with the ten-member Association of South-East Asian Nations (ASEAN), Sri Lanka, and additional bilateral agreements with Malaysia and Thailand. It has a more comprehensive economic agreement with South Korea. India also expects to sign an agreement with the European Union later this year.
Author: Sherpem Sherpa (dpa/AP)
Editor: Sarah Berning