India–Japan FTA Tracker 2026: CEPA Review Gains Momentum as Trade Hits $27.5 Billion
India and Japan are accelerating the review of their Comprehensive Economic Partnership Agreement (CEPA), putting trade, investment and market access back in focus. With bilateral trade reaching US$27.47 billion in FY2025–26, the CEPA review could shape the next phase of India–Japan economic cooperation—from manufacturing and semiconductors to AI and supply chains.
India and Japan are moving to accelerate the review of their Comprehensive Economic Partnership Agreement (CEPA), opening a new chapter in a trade relationship that has expanded significantly since the agreement came into force in 2011.
The latest development came on 25 August 2026, when India’s Commerce and Industry Minister Piyush Goyal and Japan’s Minister of Economy, Trade and Industry Akazawa Ryosei agreed to accelerate the CEPA review and make the framework more responsive to emerging economic opportunities. The timing is significant. India–Japan bilateral trade reached US$27.47 billion in FY2025–26, while Japanese investment in India and cooperation in areas such as semiconductors, artificial intelligence, manufacturing and supply-chain resilience are expanding.
The question now is how the CEPA can evolve to support the next phase of India–Japan economic engagement.
India–Japan CEPA Tracker 2026
Date | Key Development | Status |
1 August 2011 | India–Japan CEPA enters into force | Completed |
2025 | Leaders call for further review and diversification of bilateral trade | Completed |
2 March 2026 | 7th CEPA Joint Committee Meeting held in Tokyo | Completed |
August 2026 | India and Japan agree to accelerate CEPA review | Latest |
Next phase | Further review and sectoral discussions | Ongoing |
Current status: CEPA review accelerating
CEPA in force since: August 2011
Latest Joint Committee meeting: 2 March 2026
Bilateral trade, FY2025–26: US$27.47 billion
Major emerging areas: Semiconductors, AI, advanced manufacturing and investment
India–Japan CEPA: Why the Review Matters
The India–Japan CEPA is broader than a conventional tariff agreement. It covers trade in goods and services, investment, movement of natural persons, intellectual property, customs procedures and other trade-related issues.
The agreement envisaged tariff abolition on more than 94% of items traded between the two countries over a 10-year period. Six CEPA subcommittees cover areas including rules of origin, customs procedures, technical regulations, standards, services, business-environment improvement and movement of natural persons. All six have met, while a proposal for a dedicated Trade in Goods subcommittee remains under discussion.
More than 15 years after the CEPA entered into force, the economic environment has changed substantially. India and Japan are now looking beyond traditional merchandise trade towards technology, supply chains, semiconductors, AI, clean energy, financial services and advanced manufacturing.
That is the context in which the current review is taking place.
India–Japan Trade Crosses US$27 Billion
Bilateral trade has grown significantly over the past five years.
Financial Year | Indian Exports to Japan | Indian Imports from Japan | Bilateral Trade |
2020–21 | US$4.43 bn | US$10.90 bn | US$15.33 bn |
2021–22 | US$6.18 bn | US$14.39 bn | US$20.57 bn |
2022–23 | US$5.46 bn | US$16.49 bn | US$21.96 bn |
2023–24 | US$5.15 bn | US$17.69 bn | US$22.85 bn |
2024–25 | US$6.25 bn | US$18.90 bn | US$25.15 bn |
2025–26 | US$6.04 bn | US$21.43 bn | US$27.47 bn |
Source: Embassy of India, Tokyo / Government of India.
The numbers show a clear expansion in two-way trade, although India's imports from Japan remain substantially higher than its exports.
India's major exports include organic chemicals, vehicles, machinery, aluminium, fish and seafood and electrical equipment. Major imports from Japan include machinery, copper, electrical equipment, chemicals, iron and steel and vehicles.
For the CEPA review, the challenge is therefore not simply to increase trade, but to explore how the agreement can support greater diversification and broader participation by Indian businesses.
What Could Be on the CEPA Review Agenda?
Market Access
Market access is likely to remain a central issue.
For Indian exporters, access to the Japanese market involves more than tariffs. Product standards, certification, technical regulations, food-safety requirements and customs procedures can all affect the ability of companies to export. The review provides an opportunity to examine implementation issues and identify areas where businesses continue to face practical challenges.
Trade in Goods
The proposed Trade in Goods subcommittee could provide a dedicated institutional mechanism for discussing product-level market-access and implementation issues.
Its possible establishment will therefore be an important development to watch.
Services and Talent
India and Japan are also expanding cooperation in technology, financial services and knowledge-intensive sectors. The CEPA already contains provisions relating to services and movement of natural persons. As business links deepen, the practical implementation of these provisions could become increasingly important.
Rules and Standards
Rules of origin, customs procedures, standards and technical regulations can determine how effectively companies use preferential trade agreements. For SMEs in particular, reducing complexity and improving predictability can be as important as tariff reductions.
Semiconductors and AI Add a New Dimension
Perhaps the biggest change in the India–Japan economic relationship is the growing role of advanced technology. During his August 2026 visit to Japan, Piyush Goyal chaired an India–Japan industry roundtable on semiconductors and artificial intelligence, involving leading Indian and Japanese companies. The discussions covered opportunities for cooperation in manufacturing, technology, investment and innovation.
This is significant because the economic relationship is increasingly moving beyond conventional trade. Semiconductors, electronics, AI, advanced manufacturing and supply-chain resilience are becoming part of the broader India–Japan economic agenda. India's efforts to build a domestic semiconductor ecosystem also create potential opportunities for Japanese companies with expertise in semiconductor equipment, materials, manufacturing and related technologies.
Japan’s Investment in India: The Bigger Opportunity?
Trade is only one part of the story. Japan is among India's major sources of foreign direct investment, with cumulative Japanese FDI into India exceeding US$47.59 billion through December 2025, according to the Embassy of India in Tokyo. Japanese investment is concentrated across sectors including automobiles, electrical equipment, telecommunications, chemicals, financial services and pharmaceuticals.
The two countries have also set a much larger investment ambition. During PM Modi's 2025 visit to Japan, India and Japan agreed to facilitate JPY 10 trillion in private investment from Japan to India over the next decade.
This makes the CEPA review relevant not just to exporters, but also to Japanese companies considering manufacturing, technology and investment opportunities in India.
From Trade Agreement to Supply-Chain Partnership
The India–Japan economic relationship is increasingly being shaped by industrial cooperation. Under the India–Japan Industrial Competitiveness Partnership (IJICP), cooperation spans areas including logistics, textiles, food processing, agriculture, automobiles, industrial capital goods and MSMEs. The broader partnership now encompasses economic security, supply-chain resilience, technology, innovation and clean energy, alongside traditional trade.
This means the CEPA review is taking place within a much larger economic relationship.
India–Japan CEPA: 8 Things to Watch
For companies, investors and trade professionals, the following developments will be important:
Next CEPA review meeting — The next formal round of discussions.
Trade in Goods subcommittee — Whether the proposed mechanism is established.
Market access — Progress on specific sectoral and product concerns.
Services and professional mobility — Implementation of existing provisions.
Rules of origin and customs — Measures that can improve practical CEPA utilisation.
Japanese investment — Progress towards the JPY 10 trillion investment ambition.
Semiconductors and AI — New technology and manufacturing partnerships.
Supply-chain cooperation — Expansion of Japanese manufacturing and Indian participation in global value chains.
What Comes Next for the India–Japan FTA?
The India–Japan CEPA review comes at an important point in the bilateral economic relationship. Trade has grown to US$27.47 billion, Japanese investment has reached significant levels, and cooperation is expanding into sectors that were far less prominent when the CEPA was negotiated.
The next phase will therefore be closely watched by exporters, investors and industry.
The key indicators will be market access, implementation of existing commitments, services, investment, manufacturing integration and cooperation in emerging technologies. For India and Japan, the CEPA review is ultimately about adapting an agreement created more than a decade ago to a substantially different economic landscape.
The next milestone will be the outcome of further review discussions—and whether they translate into concrete opportunities for businesses on both sides.
India–Japan CEPA: Quick FAQs
Is India negotiating a new FTA with Japan?
The current process is a review and strengthening of the existing India–Japan CEPA, which has been in force since 1 August 2011.
When was the latest India–Japan CEPA meeting?
The 7th Joint Committee Meeting was held in Tokyo on 2 March 2026.
What is the latest India Japan FTA 2026 update?
On 25 August 2026, India and Japan agreed to accelerate the CEPA review and make it more forward-looking.
How much is India–Japan bilateral trade?
Bilateral trade reached US$27.47 billion in FY2025–26.
What are the emerging areas of India–Japan economic cooperation?Semiconductors, AI, advanced manufacturing, technology, supply-chain resilience, financial services and investment are increasingly important areas.
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