An overview of india south korea trade relation today and tomorrow
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India - South Korea relations has made great strides in recent years and has become truly multi-dimensional, spurred by a significant convergence of interests, mutual goodwill and high level exchanges. Trade and economic relations have started to gather momentum again following the implementation of Comprehensive Economic Partnership Agreement (CEPA) in 2010 and the bilateral trade in 2011 crossed $ 20.5 billion registering a 70% growth over a two-year period Contact for any query: https://market-xcel.com/contact.html
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An overview of india south korea trade relation today and tomorrow
- 2. APR’18-JAN’19 (in$billion) IMPORT EXPORT TRADEDEFICIT 433.77 270.49 -163.28 398.53 265.26 -133.27 APR’19-JAN’20 (in$billion) INTRODUCTION STATUSOFINDIANECONOMY India-SouthKorearelationshasmadegreatstridesinrecentyearsandhasbecometrulymulti-dimensional, spurredbyasignificantconvergenceofinterests,mutualgoodwillandhighlevelexchanges.Tradeand economic relationshave started to gathermomentum again following the implementation of ComprehensiveEconomicPartnershipAgreement(CEPA)in2010andthebilateraltradein2011 crossed$20.5billionregisteringa70%growthoveratwo-yearperiod. ThetopexportsofIndiain2019areRefinedPetroleum ($30.2B),Diamonds($26.5B),Packaged Medicaments($13.2B),Jewellery($8.66B)andRice($7.05B),usingthe1992revisionoftheHarmonized System (HS)classification.ItstopimportsareCrudePetroleum ($74.7B),Gold($39B),Diamonds($ 20.7B),CoalBriquettes($19.4B)andPetroleumGas($12.2B). ThetopexportdestinationsofIndiaaretheUnitedStates($44.3B),theUnitedArabEmirates($28B), China($14.8B),HongKong($12.7B)andGermany($9.9B).ThetopimportoriginsareChina($68.8B), theUnitedStates($22.8B),andtheUnitedArabEmiratesorUAE($22.1B). Asiahasbecomethedevelopmentfocusoftheworldeconomy,inrecenttimes.Insidethelocale,Indiaand SouthKoreaarethethirdandfourthbiggesteconomiesaerUSAandChina.Indiahaspresentedwider financialstrategychangesandismovingtowardsamarket-driveneconomy.Atpresent,Indiaisthesecond quickestdevelopingeconomyontheplanet. IndiaIndiaisthe17thlargestexporteconomyintheworldandthe45thmostcomplexeconomyaccordingtothe EconomicComplexityIndex(ECI).Previously,thegrowthwasprojectedtobe6.0percentthisfiscalyear andexpectedtoriseto6.9percentin2020/21andto7.2percentinthefollowingyear.Lookingatthe Indianeconomy,Indiaexportedgoodsworth$322.8billionaroundtheglobein2019,reflectinga22.3% gainfrom2018to2019.OverallimportsinApril-September2019-20areestimatedtobe$312.16billion, exhibitinganegativegrowthof3.15percentoverthesameperiodlastyear-
- 6. STATUSOF SOUTHKOREAN ECONOMY EconomicgrowthofSouth Koreaisprojectedtoremain around 3% through 2019, supported by stronger export growth and fiscal stimulusthatwilloffsetthe impactoftighterregulations ononhousing and mortgage lending,which,inturn,will slow construction investment. Inflation is projectedtorisetowardthe 2%target,whilethecurrent accountsurplusnarrowsto aaround4%ofGDP.Ithasto benotedthatinlessthanfourdecades,SouthKoreahasaccomplishedsurprisingadvancements,changing itseconomyintoanexportdrivenpowerhouse.ItsGDPhascrossed$1trillionfromanegligible$2.3billion ofeveryin1962,andhasrecordedasthetwelhbiggestintheworldasindicatedby2017GDPreport.Itsper capitaincomein2017was$29,745. TheThecoronaviruspandemichaspushedSouthKorea’seconomyinthefirstquarterintoitsbiggestcontraction since2008asself-isolationmeasuresreducedconsumption,andglobaltradeslumped.Accordingtothe updatedIMFforecastsfrom14thApril2020,GDPgrowthisexpectedtofallto-1.2%in2020andpickupto 3.4%in2021,subjecttothepost-pandemicglobaleconomicrecovery.
- 10. MinisterofCommerce&Industry,SureshPrabhu,visitedthecapital,Seoulfora3daytripfrom21-23 September,2017toparticipateinthe7thAsia-EuropeEconomicMinistersMeetingandthe3rdJoint MinisterialReviewoftheIndia-SouthKoreaComprehensiveEconomicPartnershipAgreement.At theASEM meeting,theministerunderlinedtheemergenceofIndiaasoneoftheworld’sleading investmentdestinations. MrMrNitinJGadkari,Hon’bleMinisterofRoadTransport,HighwaysandShippingvisitedtheRepublicof SouthKoreafrom9-12April,2018.Around100keySouthKoreancompaniesfromportdevelopment, shipping,andshippinglogisticsectorsattendedtheforum.A ertheforum,theB2Bmeetingsbetween theSouthKoreanandIndiancompanieswereorganizedseparately.Overahundredrepresentativesof SouthKoreanbusinessesandindustrieswereinattendance.Lastly,MrGadkarihadabriefmeetingwith Kim Eunkyung,MinisteroftheMinistryofEnvironmentanddiscussedhow thetwopartiescan cooperatein'CleanGangaProject’. India-India-KoreaInfrastructureForum:Asafollow-up toShriNitinGadkari’svisit,missionorganizedthe India-SouthKoreaInfrastructureForuminSeoulandBusanfrom17-18October,2018.States’delegation from TamilNaduandMadhyaPradeshandInvestIndiateam providedanoverview ofinvestment openingsintheinfrastructuresectorofIndia.MajorSouthKoreaninfrastructureconglomerates participatedintheevent,includingHyosung,Posco,HyundaiRotem,HyundaiE&C,SamsungC&Tand GSE&C,amongothers. IndianIndianChamberofCommerceinKorea(ICCK):TheIndianChamberofCommercewasestablished inSouthKoreainJanuary,2010 to help companies,interested indoing businesswithIndia. (http://www.indochamkorea.org)AsofJanuary,2019,ICCKhas72companiesasitsmembersandhas alsobegunan‘InvestmentCamp’tourtoIndiasinceJune,2016toshowcaseopportunitiesinIndia.Two editionshavebeenheldsofarcoveringTamilNadu,TelanganaandRajasthan. KKoreaTradeInvestmentPromotionAgency(KOTRA)hassetupitsbranchofficesinDelhi,Mumbai, Chennai,BangaloreandKolkata.In2017,KOTRAsetupanewbranchatKolkata.Inaddition,Korea InternationalTradeAssociation(KITA)hasalsoopeneditsofficeinDelhiandisactivelyassistingSouth KoreanbusinessmendoingbusinessinIndia.IthasbeenmountingtrademissionstoIndiaandsupporting businessdelegationsfrom IndiatoROK.KoreanChamberssuchasKOTRAandKoreanChamberof Commerce&Industry(KCCI)haveestablishedinstitutionallinkageswithIndianChamberslikeCII,FICCI, etc.
- 11. SOUTHKOREANINVESTMENTSININDIA SouthKoreanFDItoIndia(uptoDec2019,latestdataasofSeptember,2019)stoodat$6.29billion,asper theExport-ImportBankofKorea.AmongKoreancompaniesthathaveinvestedinIndiafollowingarethe leaders– AccordingtostatisticsofKOTRAandKoreanExim Bank,KoreaninvestmentinIndiaisconcentrated mainlyinthemanufacturingsectorswhichaccountsfor85.4%,followedbywholesaleandretailtradeat 6%,financialandinsuranceactivitiesat1.1%andelectricity,gas,steamandwatersupplyat1.7%.Major centersofinvestmentareNCR(Delhi,Noida,Gurgaon),Chennai,andMumbai/Pune.USAcontinuestobe SouthKorea’smaininvestmentdestinationwithatotalof$63billion;andChina,itsmaindestinationinAsia withanoverallinvestmentofabout$52.1billion.(Source:Exim Bank,Korea).Korea’sothermajor ininvestmentdestinationsare:HongKong-$17.8billionandVietnam -$12.7billion.Theaverage investmentinIndiaduringthelastfouryearperiod(2012-2015)was$323.2million/year. HyundaiMotorGroup SamsungElectronics LGGroup KiaMotors,asistercompanyintheHyundaiGroup,announcedaninvestmentof$1.6billionintwo phasesinordertosetuptwomanufacturingunitsinAnanthapur,AndhraPradesh POSCOhascompletedconstruction YYoungoneCorporation,largestinvestorinBangladesh,whichhassignedaMoUwithTelangana Governmenttoestablisha$300millionfactoryinWarangalwithacapacityof10,000jobs HyosungCorporation,globalspandexleader,hasannouncedaninvestmentworth$450millionina GreenfieldspandexmanufacturingfacilityinAurangabadIndustrialCity,Maharashtrawithaninitial capacitytogenerate1000jobs, LLotteConfectionaryhasspread furtherbyacquiringHavmor,aGujarat-based unit,besideits investmentsinChennaiandRohtak.IthasalsobuiltitsfirststeelmillinMaharashtraandsetupanother JVwithUttamGalvaGroup.
- 19. SECTORALIMPACT: Likewise,SouthKoreawillbehitbyCOVID-19.Therewillbea2%changeinrealGDPgrowthasperOECD March,2020projection.Ithasalsobeenlargelyimpactedbythepandemic.Overall,thesectoralimpact ofthecurrentvirussituationleadstoasteeperdeclineinservicesascomparedtoagriculture.Adecreasein Chinesesupplycanfurtherinfluencetheproductivecapacityand,therefore,theexportofanygiven country,dependingontheinternationaldependenceonChineseproviders.Itisempoweringthatthetwo nationsare investigating commercialopeningsin space,defense and atomic vitality regions. India-India-RepublicofKorearelationshavemadeincrediblestridesinthelastfewyearsandhavegottentobe multifaceted,impelledbyanoteworthyconvergenceofinterests,sharedgoodwillandhigh-leveltrades. Worldtradeisexpectedtofallbetween13%and32%in2020astheCOVID19pandemicdisruptsnormal economicactivityandlifearoundtheworld.Valuechaindisruptionwasalreadyanissuewhentheviruswas stillconfinedtoChina.Itremainsasalientfactornowthatthediseasehasbecomemorewidespread.Trade islikelytofallmoresteeplyinsectorscharacterizedbycomplexvaluechainlinkages,particularlyin electronicsandautomotiveproducts.ThecoronavirusimpactonChinaandothercountriesdependenton ChinafortradewillresultinafurtherfallinSouthKoreantradein2020.Thiscriticalsituationwillmakethe worldworldthinkandformulatethestrategiestoreducetheoverdependencyononly1country.Goingbythat policy,KoreaisalsolikelytolookoutforothercountriesbesidesChina,aspresently21%ofimportsinKorea arefrom Chinaonly.Majoritemsimportedfrom Chinaincludesmachines,metals,chemicalproducts, textiles,instrumentsetc. AsnotedfromTable1andTable2,SouthKorea’snumberoneimportoriginnationisChinawith21%share asthehighestimportorigincountry.Thetop5productsimportedbyChinatoKoreainclude-machines, metals,chemicalproducts,textilesandinstrument.Indiaisthe11thlargestimportorigincountryforSouth Korea.TopproductsimportedbyIndiainclude-metals,chemicalproducts,textiles,machinesand foodstuffs. SomeidentifiedopportunityareaswhereIndiacanexpanditsbusinessare- (fig.2017in%)
- 20. OPPORTUNITYFORINDIA–ISINDIAANEW NORMAL? WiththeMakeinIndiainitiativebyGovernmentofIndia,thecountryisfocusingmajorlyonmachineryand ancillaryparts.ThisshiinparadigmwillallowIndiatoopenupmoreexportavenuesinthissectoralong withTextiles.Indiais,therefore,wellplacedtoexplorethevastscopeoftheirstrategicpartnership.Going ahead,Indiaseessomeverypotentialareasthatprovideroomforfurtherexpansion. InapostCovid-19situation,nationslikeUS, Koreaand Japan,whichhavetremendous relianceonChina,arelookingatoptions,and India might develop as a preferred destination,givenitisabletostepupthe game.InthelasttwodecadesChinahas endedupvitaltotheworldwideeconomy.As ofofnow,approximately20percentofglobal tradeinmanufacturingintermediateproducts originatesinChina. ChinaannounceditsBeltandRoadInitiative (BRI)sevenyearsagoaspartof aglobal developmentstrategyinvolvinginfrastructure developmentandinvestmentsinnearly70 countries,inordertoexploitcheapfactor markets and expand product markets. Economieswiththehighestlevelsofexposure totoChinaeitherthroughBRIorotherwiseare theonesmostaffectedbythevirus. ADVANTAGEFORINDIA–EXITCHINAMANTRAGROWS! However,achangingglobaleconomicorderwillmakemanynationsfocusonIndiaasapreferred destinationforinvestment.Indiahasallthefourfactorsofbusinessinabundance:namely,humancapital, socialcapital,naturalcapitalandanimprovingphysicalcapital.Whiletheglobaleconomicsystemisslated togotoaslump,opportunitiesandchallengesforIndiaoccurthroughallavenues. ForeigncompaniesareincreasinglylookingatIndiaasaviableinvestmentdestinationasmore investorsseektoexitChinainthewakeoftheCOVID-19outbreakanditspoliticalmanagement. Around1,000foreignfirmsarepresentlyengagedinconversationswithIndianauthorities,andat least300areactivelypursuingproductionplansinIndia–insectorssuchassmartphones,electronics, medicaldevices,textiles,andsyntheticfabric. InInaconferenceheldbetweenaseniorofficialoftheUSDepartmentofStateandrepresentativesof largeAmericancompaniesoperatinginIndia,throughtheAmericanChamberofCommerceinIndia, theimportanceofIndiaasapotentialdestinationforbusinessesshiingfromChinawasunderlined. Proposalsarebeingpreparedatvariouslevels--centralgovernmentdepartments,Indianmissions abroad,andstateindustrydepartments. • • • •
- 22. SouthKoreaisanexport-driveneconomyandisdrawntoIndia’shugemarket TheROK boastsofanimpressiveskillsetinshipbuilding,steel,atomicvitality,heavyelectrical machineryetc.andiskeentoinvestinIndia TheRepublicofKoreawillbeaffectedonapparatusandcommunicationgear Essentially,RepublicofKoreaneedsIndia’sabilityinITso wareand thencombineitwithits expertiseinIThardware,designing,engineeringandmanufacturing MaManycompanieswillnowhuntforcheaperalternativestoproducemuch-neededmanufacturing productsinordertostimulateconsumerdemandwithintheaffectednations TheproductionrequirementmightbesomewhatmetbyIndiaasmotivatingforcesareaccessible topermitfasttrackingofmanufacturingbusinessesinSEZsandfreetradezones. Bethatasitmay,Indianeedstodiversifyexportmarket,especiallyfocusingonhigh-techitemsinexpansion toessentialmerchandise,intheeventthatitneedstoentertheSouthKoreanimportmarket.The ever-expandingcanvasoftheirfinancialassociationhasdriventostrengtheningofcooperationinsectors likeenergy,electronicsandshipbuilding. It’simportanttoremember– Inaddition,withIndiabeinganagrarianeconomy,itmayhappenthatIndia’sexportinthefoodstuff categorymayincreasefurtherfromthepresent3%.