India and Japan have managed to reach a broad agreement regarding bilateral free trade pact, which may help in a 10-fold jump in trade volume. This was announced by Japanese Foreign Minister Katsuya Okada in Tokyo on Thursday. The two countries were involved in Comprehensive Economic Partnership Agreement (CEPA) negotiations since January 2007.

Foreign Minister Okada said that with the FTA in place, tariffs on 94% of exported goods from both countries would be done away with in a decade. Almost 9,000 products, ranging from steel and machinery to drugs and apparel, may benefit, as they will invite no duty or nominal tariff.

Japan’s Kyodo News agency reported that Japan is seeking to boost its economy by exporting vehicles and auto parts to India, where the auto sales is surging ahead at an amazing pace. India’s low production cost is another aspect Japanese are interested.

During the negotiations, Japan is demanding reduced tariffs for auto parts, which constitutes the majority of export from Japan to India. India is asking to simplify approval procedures for the sale of generic drugs and to increase job opportunities for Indians in Japan.

Last year, the bilateral trade between the two countries stood at a paltry $11 billion, just about 4% of Japan’s trade with China. While Japan exports vehicles, auto parts and electronic goods to India, it imports oil, steel, iron ore, animal feed and jewelry from India. Trade with India is merely 1% of Japan’s overall trade. All these years Japan was concentrating on trade with China and countries in southeastern Asia. Now with the Indian economy flourishing, the time is ripe to exploit the potential for both countries.

The two countries are trying to remove the remaining obstacles with sub-cabinet-level talks before Indian Prime Minister Manmohan Singh’s Japan visit in late October. Kyodo News agency said the agreement is expected to be signed during the visit.

Oman Oil Company has agreed to invest in the Indian fertilizer sector to help in the revival of a few closed plants of Fertilizer Corporation of India (FCI) and Hindustan Fertilizer Corporation Ltd. (HFCL) and in the expansion of Rashtriya Chemicals and Fertilizers (RCF). An agreement to this effect was reached at the 6th Indo-Oman Joint Commission Meeting held in Muscat on Sunday. The Indian delegation was lead by Minister of Commerce & Industry Anand Sharma.

Both countries are planning to set up a senior-level working group with representatives of RCF, Krishak Bharati Cooperative Ltd (KRIBHCO), the Indian government and the Oman Oil Company to kick off due diligence process at the earliest.

The Joint Commission also explored ways to expand the existing capacity of the urea project of the Oman India Fertilizer Company (OMIFCO) from the current 16.5 lakh tonnes per year to 25 lakh tonnes.

Other developments in the bilateral trade talks include a feasibility study for setting up a lube blending plant in Oman by BPCL and Oman Oil Marketing Company for marketing in the neighboring countries.

Oman has evinced keen interest in setting up super-specialty hospitals and diagnostic facilities in India as joint ventures. An Omani delegation would visit India at the earliest to take this forward. Oman is also interested in investing in agro processing, especially in SEZs.

Mr. Sharma emphasized that Indian government is giving top priority to its bilateral cooperation with Oman in petroleum, gas and fertilizer sectors. The bilateral trade between the two countries reached $4.5 billion last year, with the total bilateral investment touching $7.5 billion. Mr. Sharma said that Oman, with its strategic location and existing FTAs with several countries including the USA, offers huge opportunities for Indian companies.

The minister also stressed on immediately operationalizing India-Oman Joint Investment Fund and the need to augment the fund capital. The fund started in November 2008 with a capital of $100 million may be increased to $1.5 billion.

The Ministry of External Affairs (MEA) has given instructions to its Missions abroad to vigorously pursue the economic component of its relations with the host countries, reports The Economic Times. As the country is pushing for double-digit economic growth, the government views the trade relationships with other nations vital for its own growth.

The new diplomatic approach, with added emphasis on economic ties with the host country, was presented by External Affairs Minister S M Krishna in his address to the Parliamentary Consultative Committee of Ministry of External Affairs held in Mumbai on Friday. The 175 Indian Missions abroad are being asked to expedite negotiations on Free Trade Agreements (FTAs) with host countries as well as regional groupings.

At present, India is actively pursuing FTAs with countries such as Australia, Japan, Russia, and Canada. The regional blocks that the country is engaged in FTA negotiations are 27-nation European Union, six-nation Gulf Cooperation Council (GCC), 16-nation East Asia Summit and five-nation South African Customs Union (SACU). India has already signed FTAs with ASEAN (in goods), South Korea, Singapore, Sri Lanka, Nepal and Bhutan.

Since last year, the external affairs ministry started shifting its focus to economic diplomacy and has earmarked a separate budget for the same. The budget will fund organizing buyer-seller meets and promoting Brand India abroad. The budget allocation in this head for the current year is Rs 8 crore. The ET reports that this amount is in addition to the budget of the Commerce Ministry and other departments.

The recent UNCTAD’s World Investment Prospect Survey, which lists India among the top five investment destinations, has added more thrust to the MEA initiative. The MEA has created a website indiainbusiness.nic.in to serve as a single point source of information on Indian economy and prospects of starting a business venture in the country.

A slew of multi-million pound deals were signed between British and Indian firms during the two-day India visit of the British Prime Minister David Cameron. This was announced by the visiting British Business Secretary Vince Cable today. The deals were inked in defense, infrastructure and technology sectors.

“India is a country where you don’t have to be a multinational to succeed. We have superb UK companies operating here in partnership with Indian firms, and I would encourage more UK firms to explore the opportunities here,” Mr. Cable told media persons.

Kamal Nath, Minister for Road Transport and Highways said that the economic partnership between the two countries goes back 17 years when the then British Premier John Major visited India in 1993.

The deals announced by Mr. Cable are:

1. Benoy architecture firm will develop infrastructure projects in Bangalore and Mumbai.
2. picoChip will provide wireless baseband technology for the 4G network.
3. Griffon Hoverwork will sell hovercraft to the Indian coastguard.
4. Xchanging will build a 2,000 seat processing center in a SEZ in Karnataka.

On the first day of Mr. Cameron’s visit, British aerospace major BAE Systems had signed a £700 million agreement with the state-owned defense heavyweight Hindustan Aeronautics Ltd (HAL) for the licensed production of 57 Hawk advanced jet trainers (AJTs).

Though the British PM’s India visit has been an astounding success, the major stumbling block seems to be the proposed immigration cap by Britain on non-EU citizens. Mr. Cameron tried to allay concerns of the Indians by saying, “What we want is the brightest and best from India and elsewhere. That just means having a proper system in place.”