India-Japan CEPA Review: Modernising a 15-Year-Old Trade Agreement
India and Japan are working towards reviewing and expanding the scope of their 15-year-old Comprehensive Economic Partnership Agreement (CEPA) to make it more contemporary
The review follows discussions at the 16th India-Japan Annual Summit held in New Delhi in July 2026, where the two governments agreed to accelerate a review of the agreement's implementation and utilisation
The commerce ministry has stated that terms of reference for the CEPA review have not yet been finalised, though both sides remain open to expanding its scope, scale and extent of engagement
The review is being pursued alongside a broader push to strengthen bilateral trade and investment ties, including efforts to boost the flow of Japanese investment into India
India-Japan CEPA (2011): Structure and Coverage
The Comprehensive Economic Partnership Agreement (CEPA) between India and Japan was signed on 16 February 2011 and entered into force on 1 August 2011. It is a wide-ranging, 15-chapter agreement covering not just trade in goods but also services, movement of natural persons, investment, intellectual property and customs procedures.
The 2026 discussions aim to update this 2011-era framework, whose tariff and services commitments are now considered dated relative to newer-generation Indian trade agreements.
CEPA vs FTA vs CECA: Distinguishing Trade Agreement Types
India uses several labels for its trade agreements depending on scope: a Free Trade Agreement (FTA) chiefly covers tariff elimination on goods; a Comprehensive Economic Partnership Agreement (CEPA) additionally covers services, investment and IP; a Comprehensive Economic Cooperation Agreement (CECA) is similarly broad but was the term used for early agreements like India-Malaysia (2011).
The India-Japan CEPA review is explicitly about deepening an existing, older-generation CEPA into a more contemporary one, comparable in ambition to India's newer 2022-generation agreements with the UAE and Australia.
Japan's Investment Role in the Indian Economy
Japan is among India's largest cumulative sources of foreign direct investment (FDI) and a long-standing strategic economic partner under the "Special Strategic and Global Partnership."
Key Details
- Cumulative Japanese FDI into India exceeded USD 43 billion between April 2000 and March 2025, making Japan the 5th largest source of FDI in India for that period
- India-Japan bilateral trade stood at approximately USD 27.48 billion in FY 2025-26, with a significant trade imbalance in Japan's favour (India's exports around USD 6 billion against imports of about USD 21 billion)
- The two countries have set a target of attracting 10 trillion yen in Japanese investment into India over a decade, reaffirmed at the July 2026 Annual Summit
- Japan's investment historically flows through India-Japan Industrial Townships and infrastructure financing (e.g., the Mumbai-Ahmedabad High Speed Rail, financed via Japanese ODA/soft loans)
Expanding CEPA's scope is aimed partly at correcting this trade imbalance and unlocking further investment flows, in line with the decade-long yen-investment target set alongside the annual bilateral summit process.
- India-Japan CEPA signed: 16 February 2011; entered into force: 1 August 2011
- Tariff elimination envisaged under CEPA: ~94% of traded items over 10 years
- 16th India-Japan Annual Summit: New Delhi, July 2026
- Cumulative Japanese FDI in India (April 2000-March 2025): over USD 43 billion; Japan ranks 5th among FDI source countries
- Bilateral trade, FY 2025-26: approximately USD 27.48 billion (exports ~USD 6.04 billion, imports ~USD 21.44 billion)
- Japanese investment target: 10 trillion yen into India over a decade