India is all set to reduce duty on a number of items including diesel engines and gear boxes imported from Japan as the new Comprehensive Economic Partnership Agreement (CEPA) between the two countries comes into force from Monday.

The first meeting of the Joint Committee will be co-chaired by Commerce Secretary, Rahul Khullar and Akitaka Saiki Ambassador of Japan in New Delhi on Monday. The committee is the main body that reviews and monitor the implementation and operation of the Agreement.

Under the new treaty, New Delhi will drastically reduce tariffs on diesel engines and gear boxes from Japan under their free trade pact. While India will reduce duty on diesel engines to 5 per cent from 12.5 per cent in the next six years, it will cut tariffs on gear boxes to 6.25 per cent from 12.5 per cent in the next eight years. In addition, the country will eliminate duties on car mufflers, which currently stand to 10 per cent, in the next 10 years.

Under the CEPA, signed in February, the two countries will eliminate import duties on 94 per cent of their trade items in 10 years. The agreement covers goods, services like telecom and finance, movement of professionals, customs procedures and cooperation in other areas.

The agreement will give a boost to bilateral trade between Indian and Japan, which may touch $25 billion by 2015 from $12.35 billion at present. India and the 27-nation European Union (EU) have been negotiating hard over a similar pact since June, 2007, which is likely to be concluded by the end of 2011.

The Japanese side has put 87 per cent of their tariff lines under immediate tariff liberalisation. A large number of these items are of India’s export interest include seafood, agricultural products such as mangoes, citrus fruits ,spices, instant tea, most spirits such as rum, whiskies, vodka etc, textile products such as woven fabrics, yarns, synthetic yarn, readymade garments, petro chemical and chemicals products and cement jewellery.

Under the new accord the Japanese government shall accord no less favourable treatment to the applications of Indian companies than that it accords to the like applications of its own persons. This will greatly help Indian pharmaceutical companies.

Under India-Japan CEPA, Indian professionals will be able to provide their services and contribute towards further development of Japan’s IT Sector. Indian exporters of sea foods, spices and textile products will be benefited as a result of immediate removal of tariff.

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