India and Japan, in an endeavour to strengthen economic ties, have finalised on a bilateral trade pact which is likely to open up a sea of trade opportunities for India Inc, including SMEs. The agreement, which is expected to be signed during Prime Minister Dr Manmohan Singh’s October visit to Tokyo, has been designed to safeguard the interests of Indian small industries and farmers.

This development is likely to facilitate trade movements for numerous Indian SMEs which might be intending to cash in on the Japanese markets. Indian manufacturing-based SMEs are expected to gain the most from this deal because manufactured goods would be attracting lesser tariffs than farm products.

Notably, this pact has also managed to dodge the issue of introduction of intellectual property (IP) provisions beyond that agreed under the Trade Related Aspects of IP Rights, which threatened to affect SMEs in the pharma industry.

Incidentally, Japan is India’s 10th largest export destination. Most of India’s export items to Japan come from SME–dominated sectors such as handicrafts, cotton, carpets and leather garments, among others. With signing of this trade pact, Indian SMEs from these industries could look to tap the Japanese markets further.