This article seeks to assess the impact of the India–Japan Trade Agreement on the former’s micro, small and medium enterprises sector, by focusing on changes in the realms of employment, output and investment after the implementation of the said trade agreement, using the interrupted time series methodology. The main sources of data for trade are the ITC Trade Map, and for employment, output, and investment are the Annual Survey of Industries/Centre for Monitoring Indian Economy’s Economic Outlook databases. The major findings of this article could be summarised as follows. First, following the implementation of this trade agreement, the Indo-Japanese bilateral trade increased. However, the country’s trade balance remained in the negative territory, and the deficit widened after this agreement. Furthermore, this article finds the significant positive impact of this trade pact on sectoral output, employment and investment of the selected MSME sectors, namely chemicals, leather, article, textiles and handicrafts.

CEPA, India, Japan, MSME, trade

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