South Korean President Park Geun-hye’s mid-January visit to New Delhi marked the steady elevation of her country to the top tier of India’s “look east” policy priorities. India and South Korea are drawing closer because of their complementary technological and industrial strengths, which promise to improve each country’s competitive standing in its emerging regional markets.
Indeed, while bringing to the table manufacturing strengths similar to those of Japan and China, South Korea is hamstrung by neither Japan’s nuclear pacifism nor China’s border issues in its engagement with India. In this context, a major irritant in bilateral ties—the long-delayed approval of South Korean steel major POSCO’s proposed $12 billion steel plant in the Indian state of Orissa—was removed this month when the project received environmental clearance. Nevertheless, further expansion of the India-South Korea “strategic partnership” announced in 2010 likely depends on the level of access Indian industries such as information technology and pharmaceuticals get to the South Korean market in return.
Since a comprehensive economic partnership agreement (CEPA) between South Korea and India went into effect in 2010—one of India’s first working bilateral free trade agreements—the trade volume between South Korea and India has risen 70 percent and hovers around $20 billion a year, a level similar to India’s trade volume with Japan. Buoyed by this initial surge, South Korea and India have set a target of reaching $40 billion in annual trade turnover by 2015.