How will PM’s South Korea Help in Improving Complementary Economies?

Prime Minister Narendra Modi has visited South Korea twice in the last four years, holding two summit sessions with President Moon Jae-in. India and South Korea just have to benefit from each other’s company in terms of economics, diplomacy, and defence. Especially with China in the mix, which is aggressive and keenly aware of the situation. Deepening connections between India and South Korea is a sensible and realistic conclusion for the two countries as they attempt to improve their global standing.

In 2017, soon after Moon took office, there was a paradigm shift in diplomatic behaviour. To meet Modi, he dispatched a special convoy. The prime minister then “recalled” his May 2015 visit to South Korea to strengthen bilateral relations through the Special Strategic Alliance and to emphasise the increasing defence partnership. Moon’s four-day visit to India a year later in July 2018 was one of the most extensive by any leader of the two nations. Moon has attended 18 events in all, 11 of which he was joined by Modi.

While Seoul would like to reduce its dependency on China and the US, it is a stepping stone to India’s burgeoning economy.

MoUs were inked to expand investment and bilateral trades foster collaboration among the wide sectors of; 

• Biotechnology, artificial intelligence,  railroads,and tourism, culture among others – bringing Moon’s ‘New Southern Policy’ and Modi’s ‘Act East’ closer together.
• Overall, the MoUs represent India’s and South Korea’s complementing foreign policy goals – Modi’s ‘Act East’ and Moon’s ‘New Southern Policy.’
• The new policy of the south concentrates on economic cooperation and the creation of a wealthy and peaceful society in South Asia.
• India’s Act East strategy emphasises deeper economic involvement, revitalization of cultural and tourist ties, and the formation of new strategic relationships with Indo-Pacific countries.
• Both programmes have directions that would strengthen trade and investment connections through CEPA, a bilateral trade agreement that has been in effect since 2009.

India-Korea CEPA – A harvest agreement has been reached

• Moon and Modi have decided to do business in both nations so that it benefits both the two economies and to maximise the advantages of CEPA.
• On July 10, the two nations issued a joint agreement to advance CEPA discussions, with an offer of early harvest which was made for around 35 products.
• Yoga and taekwondo teachers were also included to the list of professions under the category of Sporting and Other Recreational Services. As a result of the Early Harvest Package, Indians also can operate yoga studios in South Korea while Koreans can start taekwondo studios in India (EHP).
• South Korea has agreed to remove duties on 17 Indian products during this given period, including seven types of fish, jams and beer, jellies, mango, corn, and maize, among others. South Korea, in instance, would lower the import duty on shrimps from 20% to nil for the first 15,000 tonnes; India’s total marine exports are now at 2,400 tonnes.
• In exchange, India would lower or abolish import taxes on 11 products, including marine base oil, fillets and other such dishes
• In terms of professional mobility, the EHP extends the visa period for information communication technology (ICT) workers from one year out of three years 
• These reforms would help to improve the economic balance between the two nations, since South Korea had a $12 billion trade surplus in 2017-18.

Scenario of bilateral trade and investment

South Korea dominates the electronics market all over the globe., which is reflected in its trade with India. Electronics and electrical equipment accounted for $3.09 billion in Indian imports from South Korea in 2017. (Rs 211.7 billion).

India, on the contrary, exports raw materials like aluminium, iron, and steel, as well as organic compounds and equipment.

South Korea’s corporate landscape, like India’s, is dominated by massive family-owned companies known as chaebols. Samsung, Hyundai, and LG are just a handful of the companies that have already invested heavily in India. The majority of Indian companies in South Korea provide IT services and consultation.

The South Korean government has shown interest in the Nagpur-Mumbai highway project and is anticipated to contribute a portion of the project’s 460 billion rupees overall cost. South Korea wants to build smart towns in Bandra, Dombivli, and Kalyan. According to the Memorandum of Understanding signed during Moon’s visit to India, “the South Korean government will draw on the USD 10 billion Korea-India financial package to provide active funding for these infrastructure projects.

“Both nations will also establish the Korea-India Future Strategy Group, in which the governments and commercial sectors of the two countries would work on artificial intelligence, electric vehicles, energy, and healthcare.”

Conclusion

Finally, South Korea may be a vital partner in India’s Act East Policy in the Indo-Pacific region. In the face of rising Chinese aggressiveness, India and South Korea share a same vision as well as comparable worries about the Indo-Pacific region’s future economic and security architecture and regional order.