Japan, India sign free trade pact

Japan and India signed a free trade pact yesterday, under which the high-tech nation and the South Asian giant pledged to scrap tariffs on 94 per cent of goods within a decade.

Japan’s Foreign Minister Seiji Maehara and Indian Commerce Minister Anand Sharma signed the deal in Tokyo, hoping it will boost two-way trade between the countries.

“We have no doubt in our minds that this will usher in a new era of economic engagement, which will bring development, innovation and also prosperity in both societies,” Sharma said.

Japan is seeking more such partnerships in the region as it looks to catch up with export rival South Korea, and after China overtook it as the world’s second-largest economy in 2010.

In October India’s Prime Minister Manmohan Singh met his counterpart Naoto Kan to stress warm ties linking two of Asia’s biggest democracies at a time of high diplomatic tensions between Japan and communist-ruled China.

The deal with India may also bring further cooperation over crucial rare earth materials as Japan looks to diversify supply for its high-tech industries after the spat with Beijing led to shipment disruptions last year. Resource development “definitely figured in our discussions,” Sharma said yesterday.

Two-way trade between the two totalled $10.7 billion in 2009, less than one per cent of Japan’s total foreign trade. The agreement, approved in principle by both countries’ leaders last year, aims to open new markets for Japan as its population ages and shrinks, and to fuel the rapid growth of emerging power India.