In what is the first case of its kind, India and Japan have committed to probe charges of corruption that may be brought against their officials by suppliers of goods and services from the other country.

Under the India-Japan comprehensive economic partnership agreement (Cepa) signed last week, the two sides have agreed to fight corruption of their public officials.

?Each party shall, in accordance with its laws and regulations, take appropriate measures to prevent and combat corruption of its public officials regarding matters covered by this agreement,? says the article 7 of the Cepa

That means India, which was exempted from compliance with any international rules in government procurement, will have to bring transparency in public tender under the agreement.

State-owned agencies are big buyers of goods and services and government contracts are supposed to be very lucrative for the sheer size of the procurement. However, India is not obligated to maintain transparency in government procurement because it is not a member to the WTO plurilateral agreement.

The bilateral trade between India and Japan stood at $10.3 billion in the financial year 2009-10. While India imported goods and services worth $6.7 billion during the period, its exports was valued at $3.6 billion.

MFN duty is the starting point of equal annual instalments of elimination or reduction of customs duties. The reduction for the first year shall take place on the date of entry into force of this Agreement. The subsequent annual reductions will take place on the first day of each following year.

As per the rules of origin provisions in the agreement, the exports should have a minimum 35% local content to qualify for tariff benefits.

Duties on goods classified under the tariff lines indicated with ?A? will be eliminated, as from the date of entry into force of this Agreement; Customs duties on originating goods classified under the tariff lines indicated with ?B5? will be eliminated in six equal annual instalments. Duties on goods classified under the tariff lines indicated with ?B7? will be eliminated in eight equal annual instalments. Similarly, duties on originating goods classified under the tariff lines indicated with ?B10? shall be eliminated in 11 equal annual instalments.

Foreign direct investment inflows from Japan into India was $917 million between April and November of 2010.