Indo-Japan CEPA and Agro-trade: Opportunities and Challenges for India

In 2011, two of Asia's largest economies signed free trade agreement called Indo-Japan CEPA. From the signing of the agreement, based on trade value, India will abolish tariffs on items covering about 90 percent of its imports from Japan by 2021, whereas Japan will eliminate tariffs on items covering about 97 percent of its imports from India in the same year. Trade-in goods' agreement proposes to gradually reduce tariffs for over 4500 tariff lines or products at the six-digit level by 2021 on both sides. The study aimed to identify the list of potential agricultural products in which India will gain from increased exports and a list of commodities where India needs to adopt a defensive strategy in trading with Japan. It covered ten years from 2007-08 to 2017-18, and the same was divided into two sub-periods: the pre-FTA period (2007-08 to 2010-11) and the post-FTA period (2011-12 to 2017-18). Seventeen agricultural products such as chickpeas, frozen pacific salmon, ground-nut oil-cake, cottonseed oil-cake, frozen livers and roes, fennel seeds, opium sap, wheat, and meslin were identified as potential products in which India can gain from increasing its exports to Japan. Eight agricultural products were identified as sensitive products; out of these five were kept under the Exclusion category by India under IJCEPA. Therefore, India cautiously defended these products, but three products, such as soups and broths, pasta, and yeasts subjected to a gradual reduction in tariffs (i.e., duty-free by 2021). Technical and financial assistance to the traders and producers of these products will help them to match the requirements imposed by Japan of SPS and TBT measures and increase their exports. Government should also provide clear directives and necessary assistance to the domestic producers or processors to counter the competition from Japanese exporters