The government of South Korea has expressed a desire to widen the existing trade agreement with India, a day before commerce and industry minister Suresh Prabhu is to visit Seoul for a review.
However, the Government of India (GoI) might not be keen on broadening the terms, a senior commerce department official indicated.
Pointing to the massive gold import from Korea in recent months apart from remaining non-tariff barriers, he said many parts of the Comprehensive Economic Partnership Agreement (CEPA) of 2009 needed working on.
On Wednesday, Young Sam Kim, the Korean deputy minister for trade, industry and energy, observed that the CEPA had increased bilateral trade volumes by 50 per cent. And, added that the list of items covered could be increased; the terms on rules of origin should be strengthened. He was speaking at the Korea-India Economic Cooperation Forum.
Indian companies have repeatedly contended that the CEPA benefits Korean companies much more than Indian ones. They note, for instance, our $8 billion (Rs 51,000 crore) trade deficit with that nation. The latest data shows Indian import of $12.6 bn of goods from Korea and export of $4.2 bn in return.
While import dependency can be brought down in major categories such as plastic and related products ($ 1.2 bn) and organic chemicals ($700 million), this is not true for India's reliance on machinery products ($2.8 bn) from Korea or select iron and steel shipments ($1.5 bn), the two largest import categories, a trade expert said.
Our export there is of a diverse set -- cotton, animal hides, industrial waste, tanning extracts, aluminium.
Korean companies are also focused on investing in India. "Almost every home in India has a Korean product, be it a car or refrigerator or other electronic appliances. This shows Korean companies have benefitted from India, while Indian consumers have enjoyed the advantage of using good products," says Sanjaya Baru, secretary general at business chamber Ficci.
Around 880 Korean companies operate here and Korean investments are $2.3 bn, the 14th largest in this ranking.