Commerce Minister Piyush Goyal said India and Japan are looking to expand the scope of their Comprehensive Economic Partnership Agreement (CEPA) and create new opportunities for bilateral trade and investment. The review is significant because India’s trade deficit with Japan has widened sharply. Bilateral trade increased 9.18% to $27.47 billion in FY26, but India’s exports were only $6.03 billion, compared with imports of $21.43 billion. The trade deficit therefore rose to $15.4 billion, from $12.66 billion in FY25. The discussions are focused on achieving more balanced trade, while potentially expanding cooperation in technology, manufacturing, investment and other strategic sectors. Stock Market Impact: Positive: Indian exporters, engineering companies, auto-component makers, electronics manufacturers and firms benefiting from greater Japanese investment could gain. Positive for capital goods/manufacturing: Greater Japanese investment and technology transfer could support India’s manufacturing and infrastructure ecosystem. Mixed for import-dependent companies: Businesses heavily dependent on Japanese imports could benefit from lower tariffs, but increased competition from Japanese products may pressure some domestic manufacturers. Overall: Moderately positive for Indian equities, particularly export-oriented and manufacturing stocks, if the CEPA review results in better market access for Indian products and higher Japanese investment.

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