For its part, India has also expressed its own concerns about the agreement. New Delhi called on Japan to eliminate all non-tariff barriers in order to realize the real benefits foreseen by CEPA, especially those that would be obtained in the Japanese pharmaceutical market. It is mutually accepted that Japan`s high demand for generic drugs can potentially be met by India, representing a win-win situation for both countries. The Comprehensive Economic Partnership Agreement (CEPA) between India and Japan was signed on 16 February 2011 and entered into force on 1 August 2011. In addition to accelerating trade activities, the agreement aimed to eliminate tariffs on 90 percent of Japanese exports to India, such as auto parts and electrical equipment, and 97 percent of imports from India, including agricultural and fishery products, by 2021. Since the introduction of CEPA, merchandise trade between India and Japan has increased by 38%, with total bilateral trade expected to reach $24 billion by March 2013. In light of the agreement, Mukhopadhyay and Bhattacharyay (2011) assessed the overall economic impact of Japan-India trade integration using analysis by the Global Trade Analysis Project (GTAP). It was found that production, for both India and Japan, would increase slightly in 2020, after a reduction in tariffs compared to Business As Usual (BAU). The results expected marginal export growth, an appropriate amount of trade creation and an improvement in the well-being of both countries by 2020, with the successful implementation of CEPA. On 30 April 2012, the first economic dialogue took place at India-Japan ministerial level in order to pursue the same objectives as CEPA.
The dialogue has shown that relations between the two nations have now become more equal – they both allow for mutual concessions and compromises to achieve the expected benefits. Both countries agree that the success of CEPA depends on several dimensions. The identification of potential trade and investment areas between the two countries presents them with an important political agenda to realize the expected benefits of the Pact. The agreement had two major concerns: infrastructure in India and non-tariff barriers in Japan. On the infrastructure front, the two countries agreed in 2006 to cooperate on the huge $90 billion Delhi-Mumbai Industrial Corridor (DMIC) project. . . .