By Richa Chakravarty
Despite the Comprehensive Economic Partnership Agreement (CEPA), which was successfully implemented to help in forging strong ties between Indian and Korean companies, the current flow of trade and investment between the two nations has been relatively low due to several tariff and non-tariff barriers. In fact, under CEPA, it was stated both the countries will enjoy the benefits of lower tariff rates over a span of a few years.
For better understanding and implementation of the India-Korea CEPA, the Korea Trade Investment Promotion Agency (KOTRA), Ministry of Strategy and Finance, Republic of Korea, Korea Custom Service (KCS) and the Federation of Indian Chambers of Commerce and Industry (FICCI) had joined hands recently, to organise a seminar to highlight the benefits of the agreement.
Elaborating on the importance of CEPA, Manab Majumdar, assistant secretary general, FICCI, said, “The Korea-India CEPA offers an excellent opportunity for Indian small and medium sized companies to boost exports. India is running through a trade deficit. Last year, India registered a deficit of US$ 5 billion. CEPA could help in attaining a balance in trade. Moreover, Korea is an importer of commercial services and it registers net imports of US$ 75-80 billion. India, with its competitive advantages, should take this opportunity to offer Korea its services and help in expanding the service providers’ business portfolio.”
According to Suchismita Palai, director, Ministry of Commerce, “Being comprehensive in nature, CEPA would bring in a lot of investments by increasing trade, and create a win-win situation for both the nations. Comprising six agreements relating mainly to opening up the trade in goods and services, besides simplifying customs procedures, CEPA would boost the bilateral trade that is currently worth US$ 10 billion.”
Research done by the Korea Institute for International Economic Policy (KIEP) projects that under this agreement bilateral trade in goods will increase by US$ 3 billion per annum and total trade turnover will increase by US$ 25 billion in the next three years. CEPA is expected to boost economic growth rates and industrial production in both the countries.
Min Joon Park, head, Indian desk, Kotra, echoes the same view, “Korea has strengths in manufacturing and India excels in service industries. The economic structure of both the countries complements each other. CEPA will definitely push trade between the two nations and many electronic items will be included in the list of traded items that attract zero duty on import. A lot of thrust will be given to the electronics industry, apart from other sectors like automobiles, information, communication and telecommunications.”
South Korean consumer electronics and auto brands have moved aggressively into India and have good credibility among the Indian consumers. The success stories of the two giant electronics companies from Korea—LG and Samsung—reflect the potential of the Indian market.