A remarkable feature of South Korea is its transformation from a developing country in 1950s to a high-income country of the world with a substantial per capita income. The economic reforms of 1990s in India have been influenced with East-Asian success and South Korea was among the chief countries to have an impact on Indian policy makers' thinking process. Though Consular relations between India and South Koreawere set up in 1962, it was in 1973 with the establishment of formal diplomatic ties that a new chapter was opened in the history of Indo-Korean cooperation. Both India and Korea contribute significantly in the world GDP. Korea is among the few Asian countries that are counted among the developed countries of the world; India too has a growing stature and increasing role in international affairs. In a bid to boost bilateral ties, India and South Korea on Jun 1, 2005 decided to step up efforts to take their economic partnership to higher levels by utilising synergies in trade, investment and hi-tech areas. The two sides held ministerial discussions and hoped that negotiations for the $ 12 billion integrated steel plant to be set up by Korean company Posco at Paradip in Orissa would be concluded at an early date. Negotiations for the mega project are at an advanced stage and when completed it would be the largest single foreign investment by any country in India.
BACKGROUND -->TRADE India's exports to Korea were Rs 4325.84 crores in (April-March 2004-05) and it was of 1.21% of the total Indian Exports. While India's imports from Korea were higher at Rs 14351.54 crores in (April-March 2004-05) and it was 2.98 % of the total Indian Imports. The trade balance has been in favour of Korea. Traditionally India's exports were limited to a few primary commodities such as cotton, oil cakes, iron ore, iron & steel, organic and inorganic chemicals, and electrical machinery & equipments. During the last few years, however, the commodity composition of our exports, though still dependent on low value-added items has expanded to cover a wider range of industrial products. For the last 2-3 years, India has been exporting wheat to Korea. Indian industry is of the view that our exports to Korea, valued at US$ 650 million, are not commensurate with the vast opportunities for trade that still remain untapped. Iron ore, chemicals & allied products, marine products, processed food; cotton yarn fabrics, gems & jewellery, and leather are some of the sectors that offer tremendous potential. India imports Korean machinery and equipment and these are set to grow rapidly in face of likely investments by South Korea in transportation, construction and infrastructure sectors in India. Already, several Korean construction companies are engaged in highways, power plants, chemicals, petrochemicals and metro rail projects in India. Other sectors where Korean and Indian companies can mutually benefit are the shipbuilding, telecommunications, aviation and energy sectors. INVESTMENT
Korean investments in IndiaSouth Korea is one of the top ten leading investing countries in India. In 2003, it invested US $ 24 million in India. South Korean business groups such as LG, Samsung and Hyundai have not only established their presence in the Indian business scene but are also looking at diversifying their businesses into different sectors. Korea accounts for about 2.64% of total FDI inflows, amounting to US$ 2.601 billion (excluding amount approved for ADRs/ GDRs). The main sectors attracting foreign direct investment from South Korea are transportation industry accounting for over 1/3rd of the share, fuels (power & oil refinery), electrical equipment (computer software & electronics), chemicals (other than fertilizer) and commercial, office & household equipments. There have also been technical collaborations with South Korea- areas include transportation industry, electrical equipment including computer software & electronics, chemicals other than fertilizers, metallurgical industries and industrial machinery.
In addition to the above sectors, studies have also revealed that the two countries could set up joint collaborations in the sectors of infrastructure - power, ports, telecommunications, ship building & ship repair, petrochemicals, automobile ancillary, electrical & electronics, office equipment, banking & financial services, software as well as iron & steel. Out of 44 contracts awarded for National Highway Development Project, 9 have been won by Korean companies in collaboration with Indian companies or independently. Recently, Hyundai Heavy Industries have won two mega projects including one pipeline project worth US$ 600 million. Indian investment in Korea With the growing amount of globalization and liberalization, not only Korean companies are making their presence felt in India, Indian firms too are establishing themselves in Korea. Last year in February, Tata Motors, Mumbai signed an agreement for acquiring Daewoo Commercial Vehicles, Kunsan (South Korea) at a cost of US$ 102 million.
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