Relations below potential
That South Korean President Moon Jae-in undertook a four-day visit to India this week, when there is hectic diplomacy over the Korean peninsula, speaks of his commitment to improving bilateral ties. But despite the personal touch, and ambitions to align India’s Act East policy with Korea’s New Southern Policy, ties have drifted for lack of focus. Trade, at $20 billion, is a fraction of the potential, given that India and South Korea are Asia’s third and fourth largest economies. This figure has been a cause for worry, as the two countries had hit the $20-billion mark in 2011 after the signing of the Comprehensive Economic Partnership Agreement.
What are the challenges in economic relations?
The large trade deficit in South Korea’s favour has led India to be wary of further opening up. In turn, Korean companies cite problems in doing business in India, despite a special “Korea Plus” desk set up by the Prime Minister’s Office in 2015. Tourism between the two countries has always been low, and strategically both New Delhi and Seoul are preoccupied with tensions in their immediate neighbourhoods and ties with the big world powers than with each other.
What are the recent changes to enhance economic relations?
On Mr. Moon’s watch, this may change. Both Mr. Modi and he exuded a sense of purpose and there is a clear road map on converging interests.
- Agreement to invoke the “early harvest” clause in the 2010 CEPA will allow both to do away with tariffs in 11 areas, benefiting Indian seafood exporters and food processing units, as well as South Korean petrochemical companies.
- The inauguration of Samsung’s biggest mobile factory in Noida will bring investment and create jobs in India. More Korean companies should be persuaded to invest, by projecting a counter-narrative to the failed bid by the steel company Posco to set up its plant in Odisha.
Much will depend on negotiations on the regional free trade agreement, the Regional Comprehensive Economic Partnership. On the strategic front, India has asserted its place as a “stakeholder” in the Korean peace process, while South Korea has for the first time shown an interest in talking about an Indo-Pacific policy. At a time when U.S. foreign policy is capricious and unpredictable, and China’s is making purposeful moves towards global domination, it is important that the South Korea-India partnership grows and consolidates, to contribute to stability in the region.
(Adapted from The Hindu)