South Korea is looking at India as a dominant trade partner in the coming years as the Asian geopolitical climate is rapidly changing in the wake of the coronavirus pandemic and more and more countries show their keenness in bringing in diversification in the supply chain. Until now South Korea’s largest trading partner has been China.
“We should see our relationship with India on a very strategic level,” Shin Bongkil, South Korean Ambassador to India said at a seminar organized by the Asian Community News—a platform to boost collaboration between India and south east Asia.
However, India must further improve its business climate; its ranking on the ease of doing business index has gone up significantly, but that is not enough.
South Korea is the seventh largest investor in India. There are about 750 Korean companies operating in India. But the number is about 7,000 in Vietnam. Bongkil said that carrying out economic activities in Vietnam is far easier compared to India. The country has also been offering a host of incentives to companies with a view to woo investors.
<p style="font-weight: 400;"><strong>Also Read</strong>: <a href="https://indianarrative.com/economy/toyota-episode-a-wake-up-call-for-modi-govt-13793.html">Toyota episode a wake-up call for Modi Govt</a></p>
He said that unknotting of issues relating to bilateral relations can be expedited but “bureaucracy is not easy to deal with.”
<strong>India and South Korea trade</strong>
Meanwhile, as imports from China into India hit a roadblock with mounting tensions between the two countries, many traders are now looking at alternative supply sources including South Korea, Taiwan and Vietnam.
“A large part of the imports, which until now were coming from China such as electronic and electrical items, clothes, footwear, gifts, and other household and kitchen appliances, is now being sourced from other countries such as South Korea, Vietnam and Taiwan,” Praveen Khandelwal, Praveen Khandelwal, secretary general, Confederation of All India Traders (Cait) said.
In 2019-20, India’s trade deficit—the difference between imports and exports—with South Korea stood at $10.8 billion. The two countries aim to take the bilateral trade to $50 billion in 10 years.
<p style="font-weight: 400;"><strong>Also Read</strong>: <a href="https://indianarrative.com/world/irans-irgc-warns-us-against-inspecting-vessels-in-intl-waters-14744.html">Goods from Vietnam, Taiwan, S. Korea to replace ‘Made in China’</a></p>
While South Korea is part of the proposed Regional Comprehensive Economic Partnership (RCEP), which was slated to be signed later this year, India exited the pact in 2019 with its increasing trade deficits with other countries, particularly China.
“The key players will now be India, South Korea and Japan, which will create a formidable global supply chain that got disrupted because of the coronavirus pandemic and its economic repercussions,” said Sanjeev K. Ahuja, editor, Asian Community News.
<strong>South Korean investments into India</strong>
Hee Chul Jung, secretary-general of the Korean Chamber of Commerce and Industry in India (Kocham), said that the South Korean companies have been encouraged to donate to the PM Cares Fund—Prime Minister Narendra Modi relief fund set up earlier during the year. Besides, the members also said that the Korean companies are keen to co-operate and support Modi’s Atmanirbhar Bharat scheme—which essentially is a thrust on manufacturing and the Make in India project.
Several South Koran majors including Samsung and LG are already present in India.
Jung added that public opinion is the “most important and a determining factor” to succeed in India and make a product and brand popular. The word of mouth is critical while most businesses look for financial and government support..