Indian Prime Minister Mr. Manmohan Singh is on official bilateral tour of Japan. And among many things, the two countries yesterday announced the conclusion of four years of negotiations on a Comprehensive Economic Partnership Agreement (CEPA) that will boost bilateral trade and investment. This could make lot of things India imports from Japan very cheap. CEPA agreement could affect Indian automobile industry with with the price of Maruti Suzuki cars falling.
As per the agreement the tax levied on majority of the Japanese items including auto parts, steel and home appliances will come to an end, meaning automotive OEMs like Maruti Suzuki will have access to cheaper automotive parts that will help reduce the final costs. Currently, the taxes imposed on these items were between five and ten percent.
According to analysts, the agreement would help the Japanese auto parts makers to further increase their exports to India. Not only this, it will also help reduce dependence on China. What is more, this agreement is also reciprocally beneficial for Japan, in the sense, the latter also is having a fragile relationship with China. As the saying goes: ‘Enemy’s enemy is my friend’, firming up of bilateral relation between India and Japan would augur well for both the countries.
