Japan has agreed to upgrade its Comprehensive Economic Partnership (CEPA) with India, ending its ambivalence on India’s demand for a review of the 15-year-old pact. Visiting Japanese Prime Minister Takaichi Sanae said here that officials from both countries should get together to take the next steps to reviewing the CEPA.
“The existing CEPA between the two countries is somewhat dated, especially in the context of new trade arrangements that are now being struck across the world. We have in fact made the proposal to our Japanese colleagues in recent times that maybe it is time to look at the upgrade and review its provisions,” foreign secretary Vikram Misri said at a briefing.
India seeks CEPA review
The CEPA between India and Japan came into force in August 2011 and since then, India’s exports to Japan have stagnated while its imports have soared. Due to the widening trade deficit with Japan, India has been seeking a review of the CEPA. Before the agreement came into force India’s exports to Japan stood at $ 5.09 billion in 2010-11 and imports were $ 8.63 billion. By 2025-26 India’s exports to Japan are still stagnating at $ 6.03 billion while imports have gone up to $ 21.4 billion.
During his talks at the 16th India-Japan Annual Summit with Takaichi, Prime Minister Narendra Modi said that current bilateral trade of $ 27 billion does not do justice to two of the world’s largest economies.
During the summit, Japanese investments in India were another major subject of discussion. At the 15th summit in Tokyo in August 2025 both Prime Ministers set a target of 10 trillion yen ( Rs 5.5 lakh crore) or $62 billion investment in India in the next 10 years. Since then the Japanese have entered into more than 100 agreements to invest $ 10 billion in India, Modi said in his press statement after the summit meeting.
Japanese firms expand India presence
Prominent among these are Sumitomo Mitsui Banking Corporation (SMBC)’s Rs 17,000 crore investment in Yes Bank, MUFG’s investment of Rs 40,000 crore in Shriram Finance, and the Sumitomo-Tata Electronics agreement on manufacture of semiconductor materials. Misri said two Japanese companies are also looking to set up permanent magnet facilities in India.
Both sides also signed joint statements on Artificial Intelligence and Energy Resilience and a joint declaration on Economic Security. India and Japan would cooperate on strategic stockpiling and reserves mechanisms for crude oil and petroleum products. They will also explore joint investments in maritime energy transport value chains, Misri said.
Under the Cooperative Biogas for Growth Initiative, Japan will partner with India in setting up 1000 biogas plants across India by leveraging the vast network of cooperatives. These plants will produce bio-CNG and organic fertilizer,” Misri.
It was also agreed to enhance bilateral financial cooperation and collaboration on payment systems between India and Japan, including local currency transactions. They also recognized the importance of strengthening collaboration in the healthcare sector, including pharma supply chains.
A Memorandum of Understanding was also signed for Japanese investment and technical collaboration for battery manufacturing and EV ecosystem. Other MoUs were in pharma and medical devices, geology and mineral exploration. Letters were also exchanged for regulatory cooperation between financial authorities for regulatory cooperation.