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India-South Korea Ties: Need To Look For More Convergences – Analysis

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By Tridivesh Singh Maini

During South Korean Trade Minister Joo Hyunghwan’s recent visit to India, not only was the Comprehensive Economic Partnership Agreement (CEPA) reviewed, but a platform for promotion of South Korean Investment in India, ‘Korea Plus’ was also inaugurated. Representatives from both sides have been included in this platform. While there is one representative each from the South Korean Ministry of Industry, Trade and Energy and Korea Trade Investment and Promotion Agency (KOTRA), there are three officials from Invest India. Both sides have also agreed that the issue of India’s trade deficit needs to be addressed. India also sought access to sectors like agriculture, marine, IT and healthcare.

South Korea is important for India because it was amongst the first countries to have responded to India’s economic reforms in 1991. Its investments in India have witnessed a steady increase with brands like Hyundai, Daewoo, Samsung and LG becoming household names in the past two decades. India, however, does not figure amongst South Korea’s top 10 Foreign Direct Investment (FDI) destinations. Bilateral trade has been in the range between USD 15 Billion and 19 Billion USD in recent years. The Indian External Affairs Minister, Sushma Swaraj during a visit to South Korea in 2015 had rightly made the point, that this (figure of trade) is way below the true potential.

The realization that India-South Korea economic relations need to be given a strong fillip has been there for some time. It is for this reason that the two countries signed the CEPA in 2009 and both sides during the Korean Trade Minister’s recent visit to India sought to address some of the obstacles that limit full economic cooperation between them.

Apart from the economic sphere, strategic ties have also witnessed an upswing in recent times. During South Korean President Park Guen-hye’s visit to India in 2014, a number of issues such as, sharing classified military information, including proliferation activities by Pakistan and North Korea was shared. During Indian Prime Minister Narendra Modi’s visit to South Korea in 2015, a MoU was signed for cooperation between the National Security Council Secretariat (India) and Office of National Security (Republic of Korea). During Modi’s visit, Seoul had also expressed support for India’s entry into the Nuclear Suppliers Group, Missile Technology Control Regime, Australia Group and Wassenaar Arrangement.

Where avenues for cooperation between India and South Korea are galore, there are issues that continue to hamper the ties between these two nations.

To begin with, a number of India watchers in Korea are naturally disappointed after the scuttling of the POSCO project. A number of Korean companies which would have chosen India are now instead looking at Vietnam due to the improvement in investment conditions and its strategic location.

Second, on the Korean side too there is a realization within the business community that the bureaucracy in South Korea too is to blame, and that the political leadership needs to take charge and invest more in the relationship. While PM Modi during his visit in 2015 raised a number of important economic issues and even during January 2016, a business summit was held in India on issues which affect Korean businessmen, the political leadership on both sides is required to invest more in the relationship. Where CEPA and the Double Taxation Avoidance Agreement (DTAA) are certainly going to benefit the trade ties between the two countries, but both India and South Korea have to look beyond these measures and also try and overcome the negatives such as the persisting prevalence of Non-Tariff Barriers (NTB) in areas like agriculture.

Third, there is also a realization that South Korean businessmen need not restrict their investments to India to automobiles, infrastructure or in contentious areas where natural resources are at stake. Insteadm they can explore other areas once NTB’s are removed. A good beginning could be made by Korean investments in sectors like food processing.

Finally, South Korean investors need to reach out directly to more state governments. Currently, they have strong economic ties with Tamil Nadu, Telangana, Andhra Pradesh, Maharashtra, and Haryana and are seeking to build ties with other states. The onus is on state governments to reach out more pro-actively and explore possible areas of cooperation.

If one were to look beyond economics, there are strategic convergences between both countries which are not just bilateral. Both countries are trying to expand their global footprint and an article in Global Asia (March 2016) ‘South Korea’s drive for Middle Power influence’ by Yul Sohn strongly articulates how South Korea has been seeking to its Middle Power status by being part of Free Trade Areas (FTA) like Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP), and trying to promote a middle-power network of countries like Mexico, Indonesia, Turkey, South Korea and Australia. This East Asian country has begun to articulate its stand on key security and environmental issues in direction.

India too has been imaginative in its engagement and the focus has been on strengthening connectivity not just with South East Asia, but also in the Middle East and bolstering not the Act East Policy on the one hand and deftly strengthening India’s ‘Look West Policy’. Both , South Korea and India can look beyond just the bilateral relationship and explore cooperation in East and West. While in Iran, India has recently signed an agreement for developing the Chabahar Port during the PMs recent visit. Korean companies like Korean Electronic Power Company (KEPCO) are already investing jointly with the Iranians. Korea, in turn, can explore the possibility of helping India in infrastructural development in the Northeast. This will help in enhancing connectivity with Southeast Asia. Both countries need to find these convergences for strengthening their economic and strategic relationship.

While there is no doubt, that the past few governments have invested heavily in strengthening ties with East Asia, it is important that expectations are realistic, and basic issues which are preventing the second big-bang (post 1991) from occurring are addressed.

*Tridivesh Singh Maini is a New Delhi based policy analyst associated with The Jindal School of International Affairs, Sonipat. He can be reached at: [email protected]


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South Asia Monitor

South Asia Monitor

South Asia Monitor is an independent web journal and online resource dealing with strategic, political, security, cultural and economic issues about, pertaining to and of consequence to South Asia and the whole Indo-Pacific region. Developed for South Asia watchers across the globe or those looking for in-depth knowledge, reliable resource and documentation on this region, the site features exclusive commentaries, insightful analyses, interviews and reviews contributed by strategic experts, diplomats, journalists, analysts, researchers and students from not only this region but all over the world. It also aggregates news and views content related to the region.

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