President Park Geun-hye, who is currently on a four-day visit to India, had a summit meeting with India’s Prime Minister Manmohan Singh on January 16. The two leaders reached agreements to further bolster bilateral trade and investment, enact legislation exempting Korean businesses from double taxation, cooperate in key science and technology areas including Information and Communication Technology, and to expedite the construction of POSCO’s steel mill.
The two leaders agreed to work on upgrading their Comprehensive Economic Partnership Agreement (CEPA), with the aim of reaching US$200 billion in trade volume. Both countries have agreed on bolstering the CEPA, which has been relatively lightly regarded, in order to further promote commercial service and trade investments.
The Indian government has claimed in the past that the Korea-India CEPA is one-sided, favoring Korea. Thus it has been reluctant to follow up on it. But these bilateral talks have led to the conclusion that in spite of the trade deficit, it is in India’s best interest to upgrade the CEPA, which will increase trade volume, than to pursue a full-scale free trade agreement. As such, India and Korea will hold bilateral trade minister talks to discuss the road map towards enhancing the CEPA in the future.
To bolster investment and cooperation between the private sectors of both countries, a cooperation committee of vice ministers has been renamed the trade and investment promotion committee. In addition, the business corporation network called the CEO network forum has been formed that will invite twenty CEOs from both countries to a round table of talks, to spur cross-country trade and investment. A Memorandom of Understanding for financial support has been signed to further Korean companies’ involvement in laying down infrastructure in various areas of India. Finally, an industrial and academic-specific MOU between India’s Department of Science and Technology and Korea was also signed to enhance the co-operative commercialization of Korean technologies.
Both countries agreed to form a strategic alliance to combine India’s strengths in Information Technology and Korea’s strengths in hardware and commercialization. Also, expedition for the construction of a Korean manufacturing facility in Rajasthan has been agreed, which will allow small and medium-sized Korean businesses easy entry into India.
The two countries also signed an MOU between the Export-Import Bank of Korea and the India Infrastructure Finance Company Ltd., and decided to allow SBI, India’s largest public commercial bank, a credit line of up to US$200 million, to serve as financial support for Korean companies entering the Indian market.