In a breakthrough in bilateral economic relations, India and Japan today successfully concluded negotiations for a CEPA pact that will liberalise trade between them, even as Prime Minister Manmohan Singh promised to carry forward reforms of taxes, financial sector and capital markets.
The progress in the talks for a Comprehensive Economic Partnership Agreement (CEPA) came at the end of discussions between Singh and his Japanese counterpart Naota Kan which covered a wide range of subjects.
"Having confirmed the progress made thus far in our work, we now declare the successful conclusion of negotiations
for the Comprehensive Economic Partnership Agreement... We expressed our intention that the India-Japan CEPA will be signed at the earliest at Ministerial level, on completion of necessary formalities by both sides," a joint declaration
signed by the two leaders said.
They said the CEPA will be truly comprehensive by including fields that range from Trade in Goods, Investment, Trade in Services, and Movement of Natural Persons to Intellectual Property, Competition, Improvement of the Business Environment, Bilateral Cooperation and so forth.
"We also expressed our determination to put the India-Japan CEPA into effect soon after its signing and the completion of necessary procedures in each country," the declaration said.
Singh said the "historic achievement" would open up new business opportunities and lead to a "quantum increase" in trade and investment flows between the two countries. Earlier in the day, addressing the captains of Japanese industry and business, Singh said his government was determined to continue the economic reforms to create a favourable investment environment and facilitate higher capital inflows.
He promised to push the reform of both direct and indirect taxes with the aim of unifying indirect taxes into a single Goods and Services Tax in due course.
At their meeting, Singh and Kan noted that Japanese Foreign Direct Investment into India had witnessed an increase.
However, the Prime Minister said the economic cooperation had not reached the threshold despite the huge opportunities being offered by India where economy was growing rapidly.
Underlining that he was not underestimating "many challenges" that are faced in achieving such high level of growth, he said "we need to close the infrastructure deficit, especially in the power, transport and communication sectors."
"This is a major constraint on our development and we will give high priority to infrastructure development in the years ahead," he said, adding during India's next five-year plan from 2012 to 2017 "we envisage financial outlays of over one trillion US dollars on infrastructure projects."
Repeating that India's investment needs will be at least USD one trillion in infrastructure sector, the Prime Minister said, "Part of this will come from within but we expect Japanese companies to also provide their support."
Private investment will play a large role in achieving this target, Singh said, while asking Japanese companies to play a much greater role in development of India's economy.
From India, Mukesh Ambani, Reliance Industries Chairman and Managing Director Sunil Bharti Mittal, Bharti CMD, Fortis Chairman Malvinder Singh, and HDFC Chairman Deepak Parekh were among those present at the luncheon.
The Joint Declaration said the India-Japan CEPA will elevate the Strategic and Global Partnership between India and
Japan to a new level.
"The India-Japan CEPA will develop areas of potential mutual complementarity, further strengthen the bilateral economic relationship, and promote economic development by increasing the cross-border flows of goods, persons, investment and services," it said.
The agreement will also strengthen the foundation for the economic development of India and Japan through closer cooperation between the two countries in various fields.
"We hope that through the India-Japan CEPA’s implementation, India and Japan will be able to make maximum use of respective competitive advantages to promote the development of both economies. This will bring about increased prosperity and stability to the peoples of both countries, and thus, contribute to the peace and prosperity of the Asian region and the international community," it said.