India has sought a review of the India-Japan Comprehensive Economic Partnership Agreement (CEPA) to improve market access for Indian goods and check the growing bilateral trade imbalance. However Japan is not in favour of a full-fledged revision and has proposed corrections within the existing framework, sources close to the development have said.

Japan has said that if it agrees to a revision of the pact, the country’s Parliament has to be approached for its approval which will take a lot of time and is best avoided, a source aware of the matter told BusinessLine .

“Japan has suggested that instead of going in for a review both sides can articulate their concerns related to the agreement and attempts would be made to sort them out within the existing framework,” the source said.

Trade deficit concerns

Trade officials from both countries met in New Delhi last month to discuss the CEPA where India raised concerns about its growing trade deficit with the country and the need to provide greater market access for Indian goods under the pact.

“The Japanese officials took note of the problems articulated by Indian officials and said that they would try to resolve concerns raised for items such as mangoes, fish paste and shrimps. They said that it might be possible to make changes within the existing CEPA to sort out many of the problems,” the source said.

New Delhi is keen to review the CEPA with Japan as it has resulted in disproportionate gains for Japanese industry compared to their Indian counterparts since the agreement was implemented in 2011.

India’s exports to Japan declined to $4.5 billion in 2019-20 from $6.3 billion in 2011-12, while its imports from the country increased to $12.43 billion from $11.96 billion in the same period, as per Commerce Ministry figures. The trade balance widened to $7.91 billion in favour of Japan.

“It is true that Japan has recently taken steps for easier exports of Black Tiger Shrimps from India by relaxing inspection norms but much more needs to be done as Indian seafood exports to the country have been limited by additional inspections and auditing norms implemented by food safety bodies,” an Indian official said. The Japanese side recognised this problem and said that solutions could be mutually worked out.

“It has also been acknowledged by Japan that India’s exports of mangoes to the country had been hit as Covid-19 travel restrictions affected inspections,” the Indian official said.

Japan is of the view that such issues could be worked out through continuous interaction and without having to review the CEPA.

But India, which wants tangible market access in other areas such as textiles, leather and foot wear, would be more comfortable with a complete review, the official said.