Prime Minister Narendra Modi met South Korean President Moon Jae-in on the sidelines of the G20 summit last month in Osaka. Both agreed to find common ground between Seoul’s ‘New Southern Policy’ and New Delhi’s ‘Act East Policy’.
Today, India and South Korea have the shared values of open society, democracy and liberal international economic order and their mutual engagement is at a historically unprecedented level. Significant strides have been made in several areas of science and technology.
The Indo-Korea Science and Technology Centre, established in Bengaluru in 2010 as a collaboration between the Indian Institute of Science and the Korea Institute of Science and Technology, is a shining example in this regard.
The emerging balance of power in the region has also started influencing the trajectory of defence ties. Co-production of the K9 Thunder howitzer is a prime example of the ongoing defence collaboration. With technology transfer from South Korea, India’s Larsen and Toubro plans to achieve over 50% localisation by manufacturing the key components of these weapon systems domestically as part of ‘Make in India’. Further, both countries have regularised education exchanges. Additionally, there is regular security dialogue between India’s National Security Adviser and the intelligence agencies of Korea.
The fallout of trade war
The ongoing trade war between U.S. and China has also started playing into India-South Korea bilateral ties as South Korean companies are now finding it more difficult to sell their products in the U.S., whenever they are produced in their Chinese branches. Growing trade tensions have forced South Korean companies to contemplate moving their production facilities to locations outside China. India is emerging as a prime beneficiary here, not least because of the considerable size of the Indian domestic market, its cheap labour costs and a stable legal system.
At the Osaka meeting, both leaders emphasised the need to create a new “synergy” to meet new challenges. Since India opened up its economy in the early 1990s, India-South Korea trade ties have grown from few hundred million dollars to $22 billion at the end of 2018. Today the major items that India exports to South Korea include mineral fuels, oil distillates (mainly naphtha), cereals and, iron and steel. South Korea’s main exports to India include automobile parts and telecommunication equipment, among others.
Trade target likely to be missed
However, despite the robust ties, not everything is going as planned. The trade target of $50 billion by 2030 is most likely to be missed due to lack of adequate efforts. The Comprehensive Economic Partnership Agreement, originally the core mechanism for economic ties, requires immediate upgrading. An early harvest agreed to last year, under which India agreed to reduce tariff on 11 commodities and South Korea on 17, failed to see completion.
More than eight years into its existence, the Indian Chamber of Commerce in Korea (ICCK), is struggling to find its due space in promoting economic and business ties and spends most of its time organising social and cultural events. A new, empowered commerce body is the urgent need of the hour. The Indian Cultural Centre, established more than ten years ago, has failed to reach out to common South Koreans, who still fail to differentiate between India and Indonesia. While it teaches regional dance forms to children, the bigger picture of introducing India to the general South Korean population has been lost. Further, social and economic discrimination against Indians working and living in South Korea is still a regular occurrence.
The writer is a Seoul-based geo-strategist
Published - July 24, 2019 12:05 am IST
