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Japan and India are expected to reach a free-trade agreement by the end of this year, sources said Tuesday.

It will mark the 12th such trade deal for Japan and the first since the Democratic Party of Japan-led coalition took power last year.

Through the arrangement, Japan aims to stimulate economic growth by boosting exports of vehicle parts and other products to India, whose 1.2 billion people make it the world’s second-most populous market after China.

The trade deal, however, has not been free of problems. It hit a snag after New Delhi demanded that Tokyo ease procedural rules on authorizing the sales of foreign drugs in Japan, especially low-cost generic drugs, Japanese officials said.

Nevertheless, the two sides eventually cut a deal by expressing willingness to accommodate each other, the officials said.

Working-level talks will be completed next month, and Prime Minister Naoto Kan and his Indian counterpart, Manmohan Singh, will strike a broad-based trade agreement when Singh visits Tokyo this autumn, they said.

According to the Foreign Ministry, Japan’s trade with India constituted only 0.9 percent in overall value terms as of fiscal 2008, even though Japanese manufacturers, led by carmakers, want to expand production in the subcontinent.

After the India deal, Japan hopes to strike similar trade agreements with South Korea and Peru.

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