The agreement had two main concerns: infrastructure in India and non-tariff barriers in Japan. In 2006, the two countries agreed on the massive $90 billion Delhi-Mumbai Industrial Corridor (DMIC) project. The central agenda of the DMIC project includes the development of nine industrial zones; A high-speed freight line; Three ports; six airports; a six-lane highway without a crossing; and a 4000-megawatt plant. The project agreement looks promising in the context of the new production policy, which aims to increase the share of manufacturing in GDP to 25% within a decade, which could create 100 million jobs. The Comprehensive Economic Partnership Agreement (CEPA) between India and Japan was signed on 16 February 2011 and came into force on 1 August of that year. In addition to accelerating activity, the agreement aimed to eliminate tariffs on 90% of Japanese exports to India, such as auto parts and electrical equipment, and on 97% of imports from India, including agricultural and fisheries products, by 2021. Since the introduction of the EPA, trade between India and Japan has increased by 38%, with bilateral trade expected to reach $24 billion by March 2013. In accordance with the agreement, Mukhopadhyay and Bhattacharyay (2011) assessed the macroeconomic impact of trade integration between Japan and India on the basis of the analysis of 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 (BAU).
The results were expected of marginal export growth, adequate value-added in trade and an improvement in the well-being of both countries by 2020, with the successful implementation of the EPA. For its part, India has also expressed its own concerns about the agreement. New Delhi has called on Japan to remove all non-tariff barriers in order to realize the real benefits provided by the EPA, particularly those that would be realized in the Japanese pharmaceutical market. It is agreed that India`s strong demand for generic drugs could be met, which is a win-win situation for both countries. This paper attempts to analyze the first effects of the India-Japan Comprehensive Economic Partnership Agreement on both trade and investment relations and other areas of cooperation. Although it is too early to conduct an in-depth impact assessment, the objective of the study is to highlight some facts about the effectiveness of the agreement. Japan`s economy is highly developed, with the services sector accounting for 71% of GDP in 2009. The industrial sector, once the engine of Japanese growth, now contributes only 28% of GDP, while the agricultural sector accounts for 1%. Similarly, the services sector contributes the most to India`s GDP (55%), while agriculture and industry contribute 18% and 27% respectively. There are; however, some of the themes that are an obstacle to the success of the project. At the same time, India`s infrastructure deficit remains a serious problem for Japanese investors.