October 6, 2017
India’s Commerce & Industry Minister, Suresh Prabhu, has met with Korean trade minister, Hyun Chong Kim
The two fast-growing nations have renewed their pledge to further strengthen ties
Korean has expressed interest to invest in a US$710 million Indian road project
A joint strategic panel has been set up to identify future areas for cooperation
India and Republic of Korea (popularly known as South Korea) are entering a new phase of partnership that promises to build on their recent leadership summits. Two of the Asia’s most prominent and fastest-growing economies aim to collaborate in newer technologies in their attempts to upgrade existing trade and investment agreements.
On a recent trip to Seoul, India’s Commerce and Industry Minister Suresh Prabhu met with Hyun Chong Kim, Republic of Korea’s Minister for Trade, and discussed ways to improve and upgrade the Comprehensive Economic Partnership Agreement (CEPA) signed between the two countries in 2010. CEPA consists of an integrated package on trade in goods and services, a bilateral investment agreement along with other components such as intellectual property rights (IPR) and competition. The India Korea CEPA also covers a broad range of other areas such as trade facilitation and customs cooperation, investment, competition, IPR, among other things.
The minister’s trip has already started yielding results in the form of new joint ventures and tie-ups. For example, the Maharashtra State Government has signed a memorandum of understanding with a team from the South Korean Ministry of Land, Infrastructure and Transport for wide-ranging cooperation in infrastructure projects, including smart cities, roads, airports, metros and water transport. A delegation led by Maharashtra chief minister, Devendra Fadnavis, had accompanied Commerce and Industries Minister Suresh Prabhu to Seoul. Specifically, the South Korean government has shown interest in Maharashtra’s ambitious US$710 million Mumbai-Nagpur expressway and its second phase involving the construction of 25 townships. Bhushan Gagrani, vice-chairman and managing director of Maharashtra State Road Development Corp, had also announced that South Korea had agreed to provide a US$5.4 billion loan for the project.
The minister Suresh Prabhu also met with a delegation from South Korean business entities, which included senior executives from Samsung, LG, Hyundai, Posco and Kia Motors. Following the meeting, a joint strategic panel has been set up to identify areas of high-end technological cooperation, as well as to pinpoint areas for boosting trade and investments, between the two countries. The panel is also responsible for assisting the two countries attain co-leadership status in the Fourth Industrial Revolution; this they hope to achieve by combining India’s low-cost technological competitiveness and Korea’s mass production capabilities.
The panel, apart from Indian representatives, will have members from South Korea’s Ministry of Industry, Trade and Energy as well as from the South Korean Trade-Investment Promotion Agency. The joint panel follows up on the strategic agenda outlined during the previous leadership meetings held between Prime Minister Narendra Modi, and former Republic of Korea President Park Geun-hye in 2015, as well as during the subsequent meeting with her successor Moon Jae-in on the sidelines of the 2017 G-20 meetings in Hamburg. The panel is in addition to a Korea-India CEO Forum active since 2015.
The CEPA negotiations are focused on re-aligning divergent standards in both countries. For instance, the regulations can range from technical or phytosanitary standards for Indian mangoes to having different recognition standards for doctors or chartered accountants in both countries. The recognition standards in both countries need to align for easy movement of professionals, while facilitating for trade on a variety of Indian products, such as agricultural produce or pharma items in Korea. Apart from a broad-ranging agreement on setting up cooperation in investment, both sides have also agreed to mutually support and coordinate expansion of renewable and reliable energy.
Two factors have helped India-RoK trade and investment relations improve steadily – first, signing the CEPA in 2010 and, second, PM Narendra Modi’s visit to South Korea in May 2015. Total trade between the two countries during 2016-17 amounted to US$16.8 billion, with India figuring as South Korea’s 13th largest trade partner. Meanwhile, South Korean FDI into India (till March 2017) amounted to close to US$5 billion and Indian FDI into South Korea totalled US$3 billion. Major Korean companies currently invested in India include Samsung, Hyundai, LG Electronics and Posco with Kia Motors contemplating a US$1.1 billion investment in Andhra Pradesh. Another large investment being currently worked out is a Korean Industrial Park in Rajasthan.