Global Korea & Indo - Korean Relations

Seo–Hang LEE, Ph. D Consul-General, ROK

Global Korea &

Indo - Korean Relations

Korea : a country transformed from a war-torn ruin into a global economic leader

1950 2010

※ Source: The World Bank/Korean Statistical Information System/The Bank of Korea/KITA

(Unit: US$ bil.)

Increased for 9 consecutive months and recorded the highest ever since in Nov. 2009S&P expects Korea’s foreign exchange reserves to rise to close to $300 billion at the end of 2010 (Jan. 12, 2010)

Key Economic Indicators – 4th Largest in Asia and 15th Largest Globally

"The country’s first black and white TV produced in 1966”

"Only 45,000 homes had a telephone in 1945.”

"Korea’s first automobile produced in 1955”

“Korea is now the world’s leading IT powerhouse.”

“Korea is now the world’s leading IT powerhouse.”

“Now, No. 1 in global

display manufacturing”

“Now, No. 1 in global

display manufacturing”

"Korea built just 34 ships in 1973.“

“Now, No. 5 in global automobile manufacturing”

“Now, No. 5 in global automobile manufacturing”

“Today, the largest shipbuilder in the world”

“Today, the largest shipbuilder in the world”

5

6

Increasing interdependency b/w global affairs and peninsula issues Rising expectation of international community on the role of Korea Increasing awareness of necessity of participation and involvement in global affairs Expansion of range of issues and concerns

From Peninsula-wise perspective to Global perspective

Paradigm Shift from Peninsula-wise to Global-level

7

Creation of a new global governance: G20, NSS ODA PKO Climate Change, Energy Security, Terrorism, Piracy, etc

Increasing contribution to and participation in global issues

Global Korea for Global Commons

8

Main Tasks Ahead

INDIA & KOREA : A COMPARISION

INDIA COUNTRY KOREA

3.3 million sq. km Surface Area 99,260.00 sq. km

1.14 billion Population 48.61 million

1217.49 billionNominal GDP

(US$) 2008929.12 billion

3.304 trillionGDP growth 2009,

est. (US$ )1.338 trillion

1,017GDP per capita(US$)

200919,136

India and Korea are the 11th and 15th largest economies in the world respectively (IMF, April, 2010)

Korea and India share many common things :

long history & rich heritage Princess ‘Ayodhya’ married to King ‘Suro Kim’ of Gaya,

48 A.D. Rabindranath Tagore called Korea the “Lamp of the

East” and a “ Land of Morning Calm”, 1929

The year 2010 marks the 60th anniversary of the outbreak of the Korean war with the aggression by North Korea. India has dispatched about 350 medical defense forces, standing shoulder-to-shoulder with ROK in the battlefield.

Korea – India

Indo- Korean relations has been relatively limited, although much progress arose during last the three

decades.

In a bid to boost bilateral ties, India and Korea on

June 1st, 2005 decided to step up efforts to take their

economic partnership to higher levels by utilizing

synergies in trade, investment and hi-tech areas.

Korea, the fourth-largest economy in Asia, is a key trading and investment partner with India.

Bilateral economic relations between India and Korea have been strengthening over the years, particularly after 1991.

The opening up of the Indian economy has not only enhanced the market access for Korean goods but also provided investment opportunities for the internationally competitive Korean companies.

However, the current levels of trade and investment between the two countries is relatively low in consideration of their size and structural complementarities.

The main hindrances to expanded ties between the two countries include several tariff and non-tariff barriers.

The India - Korea Comprehensive Economic Partnership Agreement (CEPA) addresses these problems and will contribute to expand the bilateral trade and investment and boosting cooperation between the two countries.

INDIA & KOREA : GEOSTRATEGIC PARTNERS

Source : Korea International Trade Association

INDIA & KOREA : BILATERAL TRADE

India-Korea bilateral trade has increased three-fold in the past five years, up from USD5.48 billion in 2004 to USD15.56 billion in 2008.

Crude oil and refined petroleum products form a major share of the above trade.

India has consistently had a bilateral trade deficit vis-a-vis Korea.

In 2008, India became the 11th largest export market for Korean products, and the 16th largest country for imports.

Major Korean products exported to India are automobile components, mobiles, ships and petro-chemical products

Korea imports basic materials from India such as naphtha, cotton thread, ferro-chrome steel, soya oil and metal mineral.


In 2009, on account of the global recession, trade figures dipped 21.9 per cent to USD12.2 billion.

Trade volumes for January - February 2010 rose to USD2.58 billion, up from USD1.31 billion in January - February 2009.

In this period, Korean shipments to India were valued at USD1.58 billion while its imports from India amounted to USD992 million, resulting in a trade surplus of USD597-million for Korea.

India and Korea have decided to not only enhance ties to a strategic relationship but also aim to target bilateral trade level of USD30 billion by 2014.



India - Exports to Korea

768985 1106 1249 1233

18502112

3641

4624

6581

4141

0

1000

2000

3000

4000

5000

6000

7000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Year

Va

lue

(In

US

D M

illio

n)



India - Imports from Korea

1362 1326 1408 1384

2853

3632

4598

5533

6600

8977

8013

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Year

Va

lue

(In

US

D M

illio

n)

Source : Business Standard August 07, 2009



KOREA : TOP EXPORT COUNTRIES

Value in USD Million

Rank Country 2008 % Share Rank 2009 % Share

1 CHINA 91,389 21.66 1 86,703 23.85

2 U. S.A. 46,377 10.99 2 37,650 10.36

3 JAPAN 28,252 6.69 3 21,771 5.99

4 HONG KONG 19,772 4.69 4 19,661 5.41

5 SINGAPORE 16,293 3.86 5 13,617 3.75

11 INDIA 8,977 2.13 7 8,013 2.20

Korea's Total Exports 422,007 363,533

Source : Department of Commerce, Ministry of Commerce and Industry

INDIA : TOP EXPORT COUNTRIES


Rank Country 2008-2009 % Share Rank 2009-2010* % Share

1 U.A.E. 24,477.48 13.21 1 5,063.16 13.7796

2 U.S.A. 21,149.53 11.414 2 4,109.25 11.1835

3 CHINA 9,353.50 5.0479 3 2,013.34 5.4794

4 SINGAPORE 8,444.93 4.5576 4 1,951.08 5.31

5 HONG KONG 6,655.00 3.5916 5 1,366.90 3.7201

12 KOREA 3,952.29 2.133 18 539.14 1.4673

India's Total Export 185,295.36 36,743.85

* April – June 2009



KOREA : TOP IMPORT COUNTRIES

Rank Country 2008 % Share Rank 2009 % Share

1 CHINA 76,930 17.67 2 35,289 24.41

2 JAPAN 60,956 14.00 1 37,339 25.83

3 U.S.A 38,365 8.81 3 19,766 13.67

4 SAUDI ARABIA 33,781 7.76 4 13,735 9.50

5 GERMANY 14,769 3.39 6 7,605 5.26

12 INDIA 6,581 1.51 17 1,928 1.33

Korea's Total Imports 435,275 144,572

INDIA : TOP IMPORT COUNTRIES

Source : Department of Commerce, Ministry of Commerce and Industry


Rank Country 2008-2009 % Share Rank 2009-2010* % Share

1 CHINA P RP 32,497.02 10.70 1 7,397.29 12.07

2 U ARAB EMTS 23,791.25 7.83 2 3,844.51 6.27

3 SAUDI ARAB 19,972.74 6.58 3 3,449.94 5.63

4 U S A 18,561.42 6.11 4 3,432.42 5.60

5 IRAN 12,376.77 4.08 6 2,650.59 4.32

11 KOREA RP 8,676.78 2.86 12 1,773.91 2.89

India's Total Imports 303,696.31 61,305.19

* April – June 2009

Post liberalisation of the Indian economy in 1991,many Korean companies such as LG, Samsung and Hyundai entered the Indian market and since then have not only established their presence but also diversified their businesses into various sectors.

Korea accounted for around 4 percent of the total cumulative FDI received by India from 1991 to 1999.

However, Korea's share declined to 0.54 percent in total cumulative FDI during April 2000 to January 2010.

The major sectors attracting Korean FDI approval are electrical equipment (including computer software and electronics), metallurgical industries and food-processing industries.

Although Indian investment in Korea is negligible, the CEPA has come at the right time for Indian companies which are showing increasing eagerness to expand in Korea. This is a good opportunity for the Indian IT industry looking to establish a stronger presence in the APEC region.

INDIA - KOREA INVESTMENT RELATIONS

COUNTRY-WISE FDI INFLOWS INTO INDIA

FROM APRIL 2000 TO JANUARY 2010

Source : Department of Industrial Policy & Promotion, Ministry of Commerce and Industry

Rank Country

Amount of Foreign Direct Investment Inflows Percentage to total

FDI InflowsINR USD

1 MAURITIUS 2,067,574.68 46,335.04 43.19

2 SINGAPORE 426,001.03 9,639.70 8.90

3 U.S.A. 365,415.07 8,137.39 7.63

4 U.K. 252,121.28 5,712.18 5.27

5 NETHERLANDS 196,938.86 4,392.64 4.11

16 KOREA 25,686.69 577.62 0.54

Value in In Million

Tata Motor’s USD102 million investment in Daewoo Commercial Vehicles, Korea.

Novelis Inc. USA, a subsidiary of Hindalco Industries Ltd., the flagship company of the Aditya Birla Group, acquired, in January 2005, Alcan Taihan Aluminium Ltd., Korea which manufacturers aluminium rolled products. Novelis holds 68% of total capital investment of USD600 billion of Novelis Korea Ltd.

Creative Plastic, India invested USD2 million in Korea and set up a 100 percent-owned investment company, Alchemy Mold & Plastic Ltd. in Pyeongtaek, Korea.

Tata Power Company (TPC) has signed a contract worth nearly USD1billion (Rs 4,100 crore) with Doosan Heavy Industries & Construction Company, Korea for the first 4,000 MW Ultra Mega Power Project (UMPP) at Mundra, Gujarat.

POSCO’s proposed investment in a steel project in the state of Orissa is estimated at USD12 billion. The project also includes development of a captive port.

SK C&C India, an affiliate company of SK Group, Korea and Reliance Communications has entered into a partnership agreement on September 22nd 2009 to facilitate the roll-out of network and services on next generation 3G/4G platform.

INDIA - KOREA INVESTMENT RELATIONS

WHAT KOREAN COMPANIES DO IN INDIA?

• Sale

• Sourcing

• Production

• R&D

KOREAN COMPANIES IN INDIA

Tata Daewoo Commercial Vehicle (TDCV) is the 2nd largest heavy commercial vehicle manufacturer in Gunsan, Jeollabuk-do, Korea It was established in 2002

as Daewoo Commercial Vehicle Co. Ltd, after it was spun off from parent Daewoo Motor Co. Ltd. In 2004 it was acquired by Tata Motors, India's largest

passenger automobile and commercial vehicle manufacturing company.

INDIAN COMPANIES IN KOREA

29

MAHINDRA & MAHINDRA SIGNED MOU TO ACQUIRE SSANGYONG MOTORS

Mahindra & Mahindra has signed an agreement to acquire a major stake in Korean auto manufacturer Ssangyong Motor

Company (SYMC) in August 2010 to expand its global SUV footprint.

INDIA - KOREA

COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT

IKCEPA will take India-Korea relations to a higher level and is the right step in support of India's "Look East Policy."

On the other hand, Korea is looking beyond its traditional trading partners like the United States and China to sustain its trade and economic progress.

INDIA - KOREA


The India-Korea CEPA (IKCEPA) signed on 7th August 2009 has the distinction of being India’s first FTA with an OECD country, and the second comprehensive agreement signed by India, after the 2005 India-Singapore CECA.

The CEPA is almost the same as an Free Trade Agreement (FTA) but with tariffs reduced in phases. While FTA stresses trade liberalization, CEPA underlines a wider range of economic exchanges in various fields including goods and services, trade, investment, and economic cooperation.

The Korean National Assembly has ratified the free trade deal with India on 6th November 2009, opening the way for the elimination or lowering of tariffs on trade worth 15 billion dollars with Asia’s third largest economy.

The IKCEPA implemented since January 1, 2010.

According to estimates by the state-run Korea Institute for International Economic Policy (KIEP), the CEPA is expected to boost bilateral trade by as much as USD3.3 billion annually.

INDIA - KOREA


Key Points

Consists of goods, services, investment and other economic exchange and cooperation issues.

The trade deal envisages easier investment norms for companies of both the countries.

Elimination/reduction of import duties on 85 per cent of Korean exports and 90 per cent of India’s sales over the next 10 years.

It will lead to easier visa norms for Professionals (e.g. English teachers, engineering professionals and technicians).

On rules of origin, both countries agreed that the level of foreign content should be a maximum 65 per cent.

Duties on Korean auto parts, India’s most traded items, would be slashed from the extant average of 12.5 per cent to one per cent over the next eight years.

The pact will enable the duty-free export of 108 items that are made in the jointly operated industrial park of Kaesong in North Korea.

INDIA - KOREA


Economic Cooperation in CEPA

Source : Korea-India CEPA

EnergyStrengthening cooperation in such field as exploration of oil/minerals, development of alternative/renewable energies

IT Strengthening mutual cooperation for active utilization of Korea’s ‘hardware’ and India’s ‘software’

SMEs Strengthening cooperation for development/transfer and improvement in quality of managerial skills

Textiles Strengthening mutual cooperation for technical development and training of personnel in the textiles industry

Others Visual-audio content, tourism, government procurement, science & technology

Korea is the ninth country with which India now has a strategic partnership

India and Korea have agreed to double bilateral trade between the two countries to USD30 billion by 2014 and begin negotiations on a civilian nuclear agreement.

Vast investment potential in India’s infrastructure sector - power, both nuclear and thermal, roads, telecom

The Civil Nuclear Energy sector is a productive area to collaborate for mutual benefit to make India’s nuclear energy sector globally competitive.

There is a possibility of joint venture co-operation in research and development, and manufacture of military equipment including through transfer of technology.

NEW AREAS OF COOPERATION

High growth economy

Knowledge based services

Trained manpower

Capital

New product development

Technology

“Huge investment potential for Korean companies in areas such as shipping and port development, infrastructure development,

tourism and hospitality industries, agro food industries in addition to auto, communication and IT industries which already

has Korean presence in India”

“India with its competitive advantages has enormous opportunities to emerge as a leading supplier of services in the Korean market”

Future Indo – Korean Relations : 6 Steps Policy

1. Consolidate & strengthen political partnership

2. Continuous expansion, diversification & deepening economic ties

3. Forge new science & technology links

4. Strengthen a strategic relations on energy security needs

5. Strengthen cultural exchange & people-to people communication

6. Strengthen bilateral ties and cooperate in space, energy, education & tourism sector

- MEA S. M. Krishna, June 2010 -

Thank You

Dhanyawaad !

Documents

Global Korea & Indo - Korean Relations