The trade and economic relations between India and Korea have strengthened over the last decade and a half particularly after the opening up of the Indian economy in 1991. The trade ties are conducted under the umbrella of the "Agreement on Trade Promotion & Economic and Technical Cooperation" signed in 1974.

A Joint Trade Committee (JTC) at the ministerial level exists between India and the ROK for review of bilateral trade. The 4th and last meeting of the JTC was held in Seoul in October 2003 under the co-chairmanship of the then Minister of Commerce & Industry of India Shri Arun Jaitley and the then Minister of Trade, Ministry of Foreign Affairs and Trade, ROK, Mr. Hwang Doo-yun. During the meetings the entire gamut of trade relations between the two countries is reviewed. The earlier three meetings were held in (3rd JTC),May, 2000 in New Delhi;(2nd JTC)November, 1995 in Seoul and (1st JTC) in September,1987 in New Delhi.

The first meeting of Joint Business Council (JBC) of Federation of Indian Chamber of Commerce & Industry (FICCI) & the ROK Chamber of Commerce and Industry (KCCI) was held in Seoul in 1977 as a follow up of the agreement signed between KCCI and FICCI on 18th February, 1976. As per the agreement JBC meeting is required to discuss items of common interest. The objective of the setting up of JBC is to exchange of business missions and to provide market information to promote economic, commercial and technological cooperation between the two countries. The last meeting of the JBC was held in New Delhi in December 2005.

Bilateral trade between India and Korea has gathered momentum during the last few years. Compared with 2001 when total bilateral trade turnover was US$ 2.52 billion (Indian exports to ROK were US$ 1.11 million and Indian imports from ROK were US$1.41billion), the total trade has increased by more than six times since then and as per ROK’s figure, stands at US$ 15.5 billion at the end of 2008. During the last three years the trade between the two countries has shown increase of more than 100 percent. During 2007, the bilateral trade crossed the land mark of US$10billion, well ahead the target set to be achieved by two countries in 2008.

During 2008, bilateral trade has grown by about 39% despite the global financial crisis. During the year, there has been a growth of about 42% in Korean imports from India, which were recorded at US$ 6.5 billion. Among the main items, Naphtha contributed 59% of the total imports by ROK. In 2008, US$ 3.88 billion worth of Naphtha was imported from India with an annual growth of 55.5%. Other major items of imports were iron and steel, oil seeds residue, cattle feed whereas the new products with a significant growth were AC generators, photo-sensitive semi-conductors and chemical products etc. As far as Korean exports are concerned, auto parts including engines, ships/tankers and iron & steel products were the main items. During the year, rolling stock, fertilizers, footwear, ships and chemicals have shown a significant growth. ROK exports, during the year 2008, grew at 36% reaching a total amount of US$ 8.9 billion.

As per Korean statistics, the total trade turnover between India and Republic of Korea is as follows:

Year	Exports to India	Imports from India	Total turnover	Growth(%)
2001	1.41	1.11	2.52	8.8
2002	1.44	1.25	2.69	4.7
2003	2,853	1,232	4,085	55.2
2004	3,632	1,850	5,482	34.2
2005	4,597	2,112	6,709	22.4
2006	5,532	3,640	9,172	38.4
2007	6,600	4,624	11,224	22.35
2007	6,600	4,624	11,224	22.35
2008	8,977	6,581	15,558	39.005
2009 (Upto June)	3,646	1,590	5,236	(-)43.47

India has been exporting raw materials such as petroleum oils, iron ore, ash/scrap, naphtha,cotton yarn, zinc ores and concentrates, waste and scrape of precious metal, ores and minerals, oil-cake, solid residues resulting from extraction of Soya-bean, Ferro-alloys, iron ores, primary and semi-finished iron & steel, dyes and intermediates, coal tar chemicals, machinery and instruments, drugs, pharmaceuticals and fine chemicals, iron ore, transport equipment, petro alloys, non-ferrous metals, inorganic, organic and agro chemicals, finished leather, manufactures of metals, gems & jewellery, sesame seeds, marine products, iron & steel bars products, Ferro alloy, processed minerals, cosmetics, toiletries, paints, natural silk yarn, fabrics, castor oil, meat and preparations, aluminum, spices, raw cotton including waste, rubber manufactured products, manmade yarn, and fabrics. Major items of India's import from Korea are auto- parts and accessories of motor vehicles, machines and mechanical appliances, flat-rolled product of iron or non-alloy steel, monitors& projectors and their parts, steam boilers, telephone set, including telephone for cellular network, electronic goods, artificial resins, plastic material, organic and inorganic chemicals, non-ferrous metals, ships, machine tools, newsprint, spun yarn, synthetic and reclaimed rubber.

Exports from India: Agro and allied products which includes sugar and confectionery items, dairy products, paper pulp, cashew nuts, vegetable oil/ oil seeds, cattle feeds , food products ,marine products , organic and inorganic chemicals and fertilizers , semi-conductors such as diodes, transmitters, photosensitive semi-conductor devices etc. iron and steel products which include rods, bars, steel angle, tubes, pipes, wires of stainless steel, solid roll coils and also parts of electrical and electronic goods which includes circuits, purifying machines, filters, harvesting machines etc.

As per the Department of Industrial Policy and Promotion, ROK is the 16th largest investor in India in terms of actual inflow of FDI into India. During the period from April, 2000- July, 2008 the total inflow of FDI from Republic of Korea was Rs.17,642.73 million equivalent to US$ 403.94 million. As per the data from the Export-Import Bank of Korea, the following is the total amount of FDI approved and actually invested into India by Korea till March,2009 was US$1.51billion:

No. Of Acceptances	Acceptance Amount Since 1980 (in billion USD)	No. Of Investments	Investment Amount (in billion USD)
987	2.17	1,521	1.51

The government of India has liberalized the foreign investment into India and has simplified the procedure to a great extent and with a single window facility foreign visitors are guided to specialized agencies to facilitate smooth flow of investment.

The prospective area of investment for Korean investment to India are shipping and port development, infrastructure development, tourism and hospitality industries, agro food industries in addition to auto, communication and IT industries which already have their present in India. At SME level, following areas and these could be suitable for joint ventures, technology transfer and 100% investment :

- Automobiles component;
- Digital contents of animation & gaming
- Pharmaceutical products
- Software application & Hardware Engineering
- Textile/Garment Apparel Industry - Mechanical tools
- Small and medium size machinery
- Food Processing Industries

ROKs investments in India have largely taken place in the Transportation Industry, Fuels (power and oil refinery), Electrical Equipments (including computer software & electronics), Chemicals (other than fertilizer), Commercial, Office & House-hold Equipments, Metallurgical Industries, and in Food Processing Industries. Major ROK companies active in India include Hyundai Motor, Samsung Electronics, LG, Lotte Group, and Doosan Heavy Industries. Now major ROK companies like Samsung, Hyundai and LG are expanding production facilities in India and smaller companies are focusing on technical collaborations. Apart from major business companies, there are more than 100 Korean companies which have set up their business in India.

The Lotte Group acquired Parry’s Confectionery Limited and formed the Lotte India Corporation Limited in 2004. They are based in Chennai.

POSCO, one of the largest steel manufacturers in the world is investing US$ 12 billion in constructing an integrated steel plant at Paradeep in Jagatsinghpur District of Orissa to produce 12 million tons of steel annually. This would be the single largest overseas investment by ROK and the single largest inward investment into India.

Samsung Electronics will be investing in a phased manner around US$ 250 million to manufacture mobile phones in India. The plant, which is located in the State of Haryana in India, has commenced production in March 2006. Samsung Engineering has opened its Global Engineering Centre in New Delhi.

A) Novelis Inc., a subsidiary of Hindalco Industries Limited the flagship company of the Aditya Birla Group, acquired Alcan Taihan Aluminum Limited in January 2005. Novelis Inc. holds 68% of total capital investment of US$ 600 million of Novelis Korea Limited. Novelis Korea is Asia’s number one manufacturer of aluminum rolled products with state of art production facilities in Yeongju and Ulsan and employs more than 1,200 employees. An Indian Company, M/s Creative Plastic, invested US$ 2 million in ROK and set up a 100% investment company, Alchemy Mold & Plastic Ltd. in Pyeongtaek.

B) Tata Motors Limited, India, also acquired the Daewoo Commercial Vehicle (DWCV), Gunsan, Korea for a total price of KRW 120 billion (approximately US$ 102 million or Rupees 4650 million) in March 2004. These are the only major Indian investments in South Korea

H.E. Mr. Manmohan Singh, Prime Minister of the Republic of India and H.E. Mr.Roh Moo-hyun, the then President of the Republic of Korea met in New Delhi on 6 October 2004 and agreed to establish a Joint Study Group (JSG) composed of officials, economists and representatives of the business community, to take a comprehensive view of the bilateral linkages in trade, investment and services and other area of economic cooperation. In particular, the joint Study Group was mandated with the task of, inter alia, examining the feasibility of a comprehensive economic partnership agreement (CEPA) between two countries. The JSG submitted its Report to the two Governments in February, 2006.

During the State Visit to ROK by President of India Dr. A.P.J. Abdul Kalam from 6-9 February, 2006, a Ministerial-level Joint Statement was signed to set-up a Joint Task Force (JTF) to develop a Comprehensive Economic Partnership Agreement (CEPA). Seven Working Groups were set up for examining the issues arising in the CEPA, namely, those for Trade in goods, Trade in services, Investment, Other Regulations and Economic Cooperation, General provisions and Dispute settlement, Rules of Origin, Customs Administration and procedures.

After 12 rounds of protracted negotiations over a period of two and half years, both sides have succeeded in resolving all outstanding issues, Negotiations on India-ROK Comprehensive Economic Partnership Agreement (CEPA) were concluded in October, 2008. CEPA is scheduled to be signed on 7th August ,2009 in Seoul by Hon’ble Minister of Commerce & Industries Mr. Anand Sharma and ROK’s Minister of Trade H.E. Kim Jong-hoon. The CEPA Agreement is expected to further accelerate the growth of the flows of bilateral trade and investment between India and ROK, the 12th and the 15th largest economies in the world respectively.

India and ROK are negotiating to revise the Double Taxation Avoidance Convention (DTAC) between India and ROK signed in 1986. The fourth round of negotiations for the revision of the Convention for the Avoidance of Double Taxation (DTAC) was held in Seoul from 19-22 February, 2008. The next round is expected to be held in Seoul in the second half of 2009.

The Department of Industrial Policy & Promotion in the Ministry of Commerce and Industry, Government of India, has set up a Korea Desk to facilitate Korean investors in India. The contact details of the ‘Korea Desk’ are as follows:

Investment Promotion & Infrastructure Development Cell
Department of Industrial Policy & Promotion
Ministry of Commerce & Industry
Government of India
368 Udyog Bhawan
New Delhi - 110 011
Telephone: + 91 11 2306 2221
Fax: + 91 11 2306 2626
E-mail: korea.desk@nic.in
Website: http://dipp.gov.in/korea

Indian Bank in ROK

As on 15th July,2009