Introduction
The deeper bilateral trade arrangements of India are sometimes referred to as CEPA; India also has almost similar agreements with terms such as CECA/CECPA/CEPA with the various partners. Consider below such a combination of comprehensive economic partnership tools (goods, services, investment, economic cooperation) as a family and profile five key partners: South Korea, Japan, the UAE, Mauritius and Singapore. Under each, I sum up what the agreement entails, headline tariff results, and tangible improvements in the bilateral trade and cooperation as a result of the pact.
1) India South Korea (India-Korea CEPA, force 1 Jan 2010)-
The main areas included: goods (manufactured goods, auto parts, electronics, steel), services (IT, engineering, finance, legal), investment and IPR/technical cooperation. Tariff result: The phasing of tariff cut/s on most tariff lines- the agreement cuts or cuts off tariffs on approximately 93 per cent of the tariff lines of Korea and approximately 85 per cent of the tariff lines of India, with staging categories that time the tariff reductions. The way it helped trade/cooperate: Korea received preferential treatment to autos, electronics and capital goods, whereas India received preferential treatment to textiles, gems and some exports of engineering goods and services (IT, business services). The agreement also made rules on investment (more ownership in certain sectors) and established foreseeable rules of origin and customs procedures that reduced compliance costs of companies to and from the two markets (which trade multiple times). The academic evaluations underline the importance of the CEPA in enhancing the linkage of services and facilitating supply-chain integration in the electronics and auto parts.
2) India-Japan (India-Japan CEPA, signed 2011)
Major areas of coverage: a wide package of industrial products, pharmaceutical products, autos, machinery, agriculture (limited/sensitive), services (professional, IT, financial), investment, customs facilitation, and economic cooperation (technology, training). Tariff outcome: the CEPA offers a tariff elimination schedule on most of the manufacturing lines and special staging of sensitive products. It is also loaded with provisions of customs valuation and trade facilitation so as to expedite the clearance and reduce trade frictions. The implementing protocols and the text are published by the Ministry of Commerce. How it has enabled trade/cooperation: Japan-India CEPA increased the bilateral investment and technology flows – Japanese companies took advantage of the agreement to increase the production and R&D activity in India, and Indian services firms enjoyed better access to IT and professional services. The economic-cooperation chapters supported infrastructure and industrial cooperation (special economic zones, manufacturing clusters), which made sharing of projects and transfer of skills possible.
3) India United Arab Emirates India-UAE CEPA (in force 1 May 2022)
Sectors of focus include goods (textiles, gems and jewellery, engineering goods, agriculture and food items), services (IT, transport, professional services), investment, technical cooperation and facilitation (customs, rules-of-origin, MSME focus). Tariff result: the CEPA eliminates/minimises tariffs on the mass of tariff lines – the government and analyst summaries report that over 97 per cent of UAE tariff lines are being eliminated by the CEPA and that almost every Indian export is being covered by the preferential treatment. It is also stipulated in the pact that an ambitious rules of origin and trade facilitation framework will be established to reduce informal barriers. Facilitation to trade/cooperation: Once in force, bilateral trade volumes and market accessibility to Indian MSMEs grew – industrious sectors like gems and jewellery, apparel, engineering goods, and food items enjoyed tariff advantages as well as quicker customs processing. The agreement has been specifically crafted in order to enhance services and investment nexus, get the UAE to be a logistics/warehouse destination of Indian exporters, and acquire UAE investment in Indian manufacturing and energy. The actual trade data and commentaries in the real-world attribute credit to the implementation of CEPA for providing a significant trade boost.
4) India Mauritius (India- Mauritius CECPA, effective 1 April 2021)
Important areas of coverage: trade in goods, trade in services (vast coverage-insurance, banking, telecom, professional services) and an economic-cooperation chapter, which aims at SMEs, pharmaceuticals, and ICT and blue economy cooperation.
Tariff result: The CECPA provides tariff reductions for large product sets. CECPA opens hundreds of Mauritian products to India, with Indian exporters receiving preferential treatment on the list of products. Reports show that India has 310 export items and Mauritius 615 product lines enjoying preferential treatment under the agreement. Services in 90+ sectors are also liberalised in the agreement.
How it promoted trade/cooperation: In addition to tariff preferences, the greatest value brought about by the CECPA is the services and cooperation: the agreement is the first time an African nation has signed a trade agreement with India and is explicitly directed to Africa. The mutual recognition of professional qualifications, access to financial services and joint efforts (SME support, investment facilitation) provisions have enhanced both bilateral investment flows and provided new avenues through which Indian companies can use Mauritius as an entry point to African markets.
5) India-Singapore (India-Singapore CECA, which came into effect on 1 Aug 2005)- (CECA was contained within as a model, as a comprehensive model)
Important areas of interest: practically all traded industries’ goods (electronics, pharma, machinery), and services (finance, IT, professional services, logistics), investment, intellectual property and facilitation of customs.
Result of tariff: Singapore was willing to accept close to zero tariff on the Indian goods (Singapore already has a low tariff on its products); India was willing to have gradual concessions on manufactures and on selected goods. The deal divided the concessions of India into Early Harvest, Phased Elimination, Phased Reduction and a Negative List. The zero/near-zero tariff policy by Singapore has made the market easily accessible to the Indian exporters of services and some goods.
How it facilitated trade/cooperation: CECA has played a key role in strengthening services trade (finance, logistics, IT) and investment flows. Singapore is a significant investor and a portal to ASEAN by Indian firms and to India by multinationals. The agreement also made the process of customs easier and made it possible to cooperate in the sphere of financial services and skills, and bring bilateral commercial relationships to the next stage, which is not raw goods trade.
Cross-cutting effects, constraints and practice- Typical advantages: these full package agreements are a mix of tariff liberalisation and services liberalisation, investment terms and cooperation chapters – all of which reduce the cost of transactions, the market accessibility of services (a comparative advantage to India), the attraction of investment, and supply-chain integration opportunities to manufacturers and MSMEs. They also provide the predictability of the law (rules of origin, customs cooperation), which assists the exporters in scaling.
Practical constraints and issues: the results are different across sectors. Agricultural products that are sensitive and certain parts of the policy are commonly omitted or introduced gradually; non-tariff barriers (standards, sanitary rules) and strict rules-of-origin continue to be costly to comply with. Real-world adjustments, e.g. disruptions due to changes in domestic taxes or rebalancing tariffs, indicate that CEPA benefits need to be actively used by the exporters and regulatory alignment (Reuters coverage of bullion trade in India-UAE CEPA illustrates those complexities).
Final takeaways
The CEPA/CECA/CECPA instruments of India are strategic tools that incorporate tariff reduction along with services liberalisation, investment facilitation and cooperation chapters. The examples of Japan, Korea, UAE, Mauritius and Singapore are other applications of the model: deepening industrial supply chains (Korea, Japan), establishing a logistics and investment centre (UAE, Singapore), and establishing continent-gateway connections (Mauritius). The agreements have had quantifiable effects in enhancing market accessibility to Indian goods and services, inbound investment and have offered frameworks to sectoral cooperation, but the benefits are reliant on implementation, rules-of-origin management and complementary domestic reforms to assist firms to capitalise on the new preferences.
