NEW DELHI (Reuters) - India on Tuesday moved one step closer to signing a free trade agreement with Japan as the cabinet cleared a deal which could increase bilateral commerce tenfold between the two Asian powers.
“The cabinet has cleared it,” government spokesperson Neelam Kapoor told reporters, adding the deal was expected to be finalised when Prime Minister Manmohan Singh visits Japan later in October.
The pact is one of several India, with its economy growing at 8.5 percent or more this year and its potential customer base of 1.2 billion, is negotiating.
Asia’s third-largest economy wants to sharply increase its share of global trade, currently less than two percent, in line with its rising global heft. A similar deal with the European Union, India’s largest trade partner, may also be concluded soon.
Trade between India and Japan in 2009 was 940 billion yen ($11 billion), about 4 percent of Japan’s trade with China, Japanese government figures show.
The Japanese Foreign Minister has said the deal, which will eliminate tariffs on 94 percent of bilateral trade flows in 10 years, could increase trade tenfold.
The pact follows years of wrangling over issues such as tariffs on Japanese car parts and tough checks on Indian pharmaceutical goods.
Reporting by Nigam Prusty; Editing by Charles Dick