India's Trade & Investment Treaties: CEPA, CECA & BIT

By Sneha Iyer | Updated March 2026

What Are India's Trade & Investment Treaties?

India maintains a growing network of trade and investment agreements that provide preferential tariff access, services liberalisation, and investment protections for companies from treaty-partner countries. These agreements fall into three broad categories: Comprehensive Economic Partnership Agreements (CEPAs), which cover goods, services, investment, and regulatory cooperation; Comprehensive Economic Cooperation Agreements (CECAs), which have a similar scope but use different nomenclature; and Bilateral Investment Treaties (BITs), which focus specifically on investment protection and investor-state dispute settlement. India also participates in regional agreements such as SAFTA (South Asian Free Trade Area) and the ASEAN-India Free Trade Agreement.

For a foreign company considering foreign direct investment in India, these treaties are strategically important. A company incorporated in a CEPA/CECA partner country (Japan, Korea, UAE, Singapore, Australia, or the EFTA states) can benefit from reduced import duties, easier movement of professionals, and — in some cases — bilateral investment protections that do not exist for companies from non-treaty countries. Treaty benefits can materially reduce the cost of doing business, particularly for manufacturing, services, and supply-chain operations.

India's treaty landscape has evolved significantly since 2016, when the government terminated most of its older BITs and adopted a restrictive Model BIT. The trade agreement side, however, has expanded — India signed new CEPAs with the UAE (2022) and Oman (2025), the ECTA with Australia (2022), and the TEPA with EFTA (2024). As of March 2026, India has 13 comprehensive trade agreements in force and is negotiating with the EU, UK, Canada, and several other partners.

Legal Basis

India's trade agreements derive their domestic legal force through specific mechanisms:

• Foreign Trade (Development and Regulation) Act, 1992 — Empowers the Central Government to formulate and implement foreign trade policy, including preferential tariff schedules under trade agreements.
• Customs Tariff Act, 1975 (Section 25) — The government issues customs notifications granting preferential duty rates for imports from FTA/CEPA partner countries. Each agreement has a dedicated customs notification (e.g., Notification No. 69/2011-Customs for India-Japan CEPA).
• Rules of Origin — Each agreement specifies criteria (value addition thresholds, change in tariff classification) that goods must meet to qualify for preferential tariffs. A Certificate of Origin issued by the exporting country's designated authority is mandatory.
• FEMA, 1999 — FEMA regulations and RBI directions govern the investment protection and capital account provisions of CEPAs/CECAs that include investment chapters.
• Bilateral Investment Treaty Act (common law framework) — BITs are executive agreements; India does not require separate parliamentary ratification, but domestic enforcement of arbitral awards follows the Arbitration and Conciliation Act, 1996.

India's Major CEPA Agreements

CEPAs are India's most comprehensive trade agreements, covering goods tariff elimination, services market access, investment facilitation, intellectual property, and government procurement.

India-Japan CEPA (2011)

Signed on 16 February 2011 and effective from 1 August 2011, this was India's first CEPA with a major developed economy. Japan committed to eliminating tariffs on 97% of its tariff lines covering Indian exports, while India committed to eliminating tariffs on 90% of tariff lines for Japanese goods over a 10-year period ending in 2021. The agreement covers transfer pricing cooperation, mutual recognition of standards, and movement of professionals. Bilateral trade reached approximately USD 21.7 billion in FY 2023-24.

India-Korea CEPA (2010)

Signed on 7 August 2009 in Seoul and effective from 1 January 2010. Korea agreed to phase out or reduce tariffs on 93% of tariff lines, while India committed to 85% of its tariff lines. The agreement includes chapters on services, investment, competition, and dispute settlement. Bilateral trade increased by 40% in the first year of implementation, from USD 12 billion (FY 2009-10) to USD 17.11 billion (2010). However, India has experienced a persistent trade deficit under this agreement, which nearly doubled in value between 2010 and 2023.

India-UAE CEPA (2022)

Signed on 18 February 2022 and effective from 1 May 2022, this is India's most recent major CEPA with a Gulf nation. The UAE offered elimination of duties on 97% of its tariff lines, corresponding to 99% of Indian imports by value. Approximately 90% of India's total exports to the UAE became duty-free immediately upon entry into force. The agreement was projected to increase bilateral goods trade to over USD 100 billion and services trade to over USD 15 billion within five years. A separate India-UAE DTAA complements the CEPA for tax treaty benefits.

India's CECA Agreements

CECAs function similarly to CEPAs but were negotiated under a different nomenclature. The two most significant are with Singapore and Malaysia.

India-Singapore CECA (2005)

Signed on 29 June 2005, this was India's first comprehensive trade agreement with an ASEAN nation and remains one of the most consequential. The agreement eliminated tariffs on over 3,000 tariff lines immediately, with an additional 2,000-plus tariff lines reduced. It covers trade in goods, services, investment protection (including expropriation protections and investor-state dispute settlement), mutual recognition of professional qualifications, and customs cooperation. Singapore is India's largest source of FDI, with cumulative investment of approximately USD 174.9 billion over the past 25 years (nearly 24% of total FDI inflows into India). Bilateral trade grew from USD 6.7 billion in FY 2004-05 to USD 35.6 billion in FY 2023-24.

India-Malaysia CECA (2011)

Signed on 18 February 2011 and effective from 1 July 2011, MICECA covers trade in goods, services, investment, and movement of natural persons. The agreement offers more liberal tariff concessions than the ASEAN-India Trade in Goods Agreement, with fewer excluded products and shorter timeframes for tariff elimination. India committed to allowing Malaysian foreign equity shareholding of 49% to 100% across 84 services sub-sectors, including professional services, healthcare, telecommunications, retail, and environmental services.

Regional and Newer Agreements

India-ASEAN FTA (AIFTA)

The ASEAN-India Free Trade Area covers tariff liberalisation on over 90% of products traded between India and the 10 ASEAN member states. Both sides agreed to progressively reduce or eliminate duties on 76.4% of goods. Special products such as palm oil, coffee, black tea, and pepper are included with phased tariff reductions. A separate ASEAN-India Trade in Services Agreement and ASEAN-India Investment Agreement complement the goods FTA.

SAFTA (South Asian Free Trade Area)

Signed in 2004 and effective from 1 January 2006, SAFTA covers eight South Asian nations (India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Maldives, Afghanistan). Non-LDC members (including India) reduced tariffs to 0-5% over a 5-year period. Each country maintains a "sensitive list" of products excluded from tariff liberalisation, which is reviewed every four years.

India-Australia ECTA (2022)

The Economic Cooperation and Trade Agreement entered into force on 29 December 2022. Over 85% of Australian goods exports by value to India became tariff-free immediately, rising to 90% by 1 January 2026. India obtained 100% tariff-free access for its exports to Australia. Key sectors include wine (tariff reduced from 150% to phased 25-50% over nine years), wool (immediate zero tariff), pharmaceuticals (phased elimination over four years), and agricultural products. The agreement also covers services, digital trade, and government procurement.

India-EFTA TEPA (2024)

The Trade and Economic Partnership Agreement with EFTA states (Switzerland, Norway, Iceland, Liechtenstein) was signed on 10 March 2024 and entered into force on 1 October 2025 after 21 rounds of negotiations spanning 16 years. Switzerland granted duty-free access to 98% of India's industrial exports. EFTA states collectively pledged USD 100 billion in investment into India over 15 years. The TEPA includes India's first-ever enforceable provisions on trade and sustainable development, with legally binding commitments on environmental protection and labour standards.

How to Use Treaties for Trade Advantage

Foreign companies from treaty-partner countries can leverage India's trade agreements in several practical ways:

Tariff Savings on Imports into India

A Japanese auto-parts manufacturer exporting to India can claim preferential duty rates under the India-Japan CEPA instead of standard MFN rates. The saving can be 5-15 percentage points on customs duty, translating to millions of dollars on high-volume shipments. The key requirement is obtaining a Certificate of Origin (CoO) from the designated issuing authority in the exporting country and ensuring the product meets the agreement's Rules of Origin (typically 35-40% domestic value addition).

Services Market Access

Under the India-Singapore CECA, Singaporean financial services firms, engineering companies, and IT service providers receive preferential market access, including easier establishment of commercial presence and temporary movement of professionals. Similarly, under the India-EFTA TEPA, Swiss and Norwegian companies benefit from improved services commitments in sectors like banking, insurance, and consulting.

Investment Structuring

Companies from countries with active BITs or investment chapters in CEPAs (notably Singapore under CECA, and UAE under the 2024 BIT) can access treaty-level investment protections including protection against expropriation, fair and equitable treatment, and investor-state dispute settlement mechanisms. For investors from countries whose BITs India has terminated (most EU nations, Canada, Australia under the old BIT), structuring investments through a treaty-partner jurisdiction like Singapore or UAE may provide an additional layer of protection — though limitation of benefits and denial of benefits clauses must be carefully navigated.

How This Affects Foreign Investors in India

The practical implications vary significantly depending on the investor's home country:

• Japan, Korea, UAE, Singapore, Australia, EFTA investors: Active treaty benefits including preferential tariffs, services market access, and (for some) investment protections. These investors should structure supply chains and pricing to maximise treaty utilisation.
• EU investors: India terminated BITs with 22 EU countries in 2017. The EU-India FTA negotiations are ongoing but have not concluded as of March 2026. EU investors currently have no bilateral investment protection (though sunset clauses in terminated BITs may still protect pre-termination investments for 10-15 years). The India-EFTA TEPA does not cover EU members.
• US investors: India has never had a BIT with the United States. There is no FTA or CEPA. US companies operate under standard MFN tariff rates and rely on DTAA provisions for tax treaty benefits only.
• UK investors: The India-UK BIT was terminated in 2017. A new India-UK FTA has been under negotiation since 2022 and is expected to be concluded in 2026. Until then, UK investors have no bilateral investment protection (subject to sunset clauses on the old BIT).

For all foreign investors establishing a wholly-owned subsidiary or joint venture in India, understanding the treaty landscape is essential for import duty planning, transfer pricing policy, and investment protection structuring.

Common Mistakes

• Assuming all FTAs automatically apply to their products. Each agreement has a specific tariff schedule with product-level exclusions. India's "sensitive lists" under SAFTA and AIFTA exclude hundreds of tariff lines — including key sectors like dairy, textiles, and certain agricultural goods. Always check the HS code-specific concession before assuming preferential rates apply.
• Failing to obtain a valid Certificate of Origin before shipment. Preferential tariff claims require a Certificate of Origin (CoO) issued by the exporting country's designated authority. A CoO obtained after import or from the wrong authority will be rejected by Indian Customs, resulting in full MFN duty plus potential penalties under Section 114A of the Customs Act.
• Conflating trade agreements with investment treaties. A CEPA does not automatically provide BIT-level investment protections. The India-Korea CEPA, for example, has limited investment provisions compared to a full BIT. Companies seeking investor-state dispute settlement protections must verify whether the specific agreement includes an investment chapter with ISDS, or whether a separate BIT exists.
• Ignoring Rules of Origin value-addition thresholds. Products assembled in a treaty-partner country using predominantly third-country components may not meet the 35-40% domestic value addition requirement. A Korean company assembling Chinese components in Korea for export to India under the India-Korea CEPA will lose preferential access if the Korean value addition falls below the prescribed threshold.
• Not accounting for India's BIT termination program when structuring investments. Investors from countries whose BITs with India were terminated (most of Europe, Canada, and others) sometimes assume they still have treaty protections. While sunset clauses protect pre-termination investments for 10-15 years, new investments made after termination have no BIT coverage unless a new treaty is signed.

Practical Example

Takeda Manufacturing KK, a mid-sized Japanese auto-components company, decides to export precision engine parts (HS Code 8409.91) to its Indian customer, an OEM in Chennai. Under standard MFN tariffs, the basic customs duty on these parts is 15%. Under the India-Japan CEPA, the preferential tariff is 0% (as this tariff line was fully eliminated by 2021 under the 10-year phased schedule).

Takeda ships 500 containers per year, each valued at USD 50,000. Annual import value: USD 25 million (approximately INR 210 crore at INR 84/USD).

• Without CEPA: Customs duty at 15% = INR 31.5 crore + Social Welfare Surcharge (10% of duty) = INR 3.15 crore + IGST at 18% on (value + duty) = INR 38.37 crore. Total duty burden: approximately INR 73 crore.
• With CEPA: Customs duty at 0% = INR 0 + IGST at 18% on value = INR 37.8 crore (IGST is input-creditable for the Indian buyer). Net cash saving on non-creditable customs duty: INR 34.65 crore per year.

To claim the CEPA benefit, Takeda must obtain a Certificate of Origin from the Japan Chamber of Commerce and Industry (JCCI), ensure the parts meet the 40% Japanese value addition threshold under the CEPA's Rules of Origin, and present the CoO to Indian Customs at the time of filing the Bill of Entry. If Takeda assembles the parts in Japan using 70% Chinese-origin raw materials, the Japanese value addition would only be 30% — below the threshold — and the CEPA claim would be rejected.

Key Takeaways

• India has 13 comprehensive trade agreements in force (CEPAs, CECAs, FTAs), with the India-UAE CEPA (2022) and India-EFTA TEPA (2024) being the most recent major agreements
• CEPAs with Japan, Korea, and UAE eliminate tariffs on 85-97% of tariff lines, offering significant customs duty savings for qualifying goods
• India-Singapore CECA (2005) remains the most consequential agreement for FDI — Singapore accounts for 24% of all FDI into India
• India terminated BITs with 77 countries since 2016 — investors from those countries (most EU nations, UK, Canada) have lost bilateral investment protections for new investments
• Every preferential tariff claim requires a valid Certificate of Origin and compliance with Rules of Origin value-addition thresholds
• Companies should evaluate whether their home country has an active treaty with India before structuring supply chains, and consider treaty-partner jurisdictions for investment routing where legitimate

Evaluating how India's trade treaties affect your market entry or supply chain strategy? Beacon Filing's FDI advisory team provides treaty analysis, duty optimisation, and investment structuring for companies from treaty-partner countries.