Ishika Gupta, New Delhi
The trade and economic relations between India and the Republic of Korea (South Korea) have gathered pace in recent years. Their annual bilateral trade (exchange of goods between two nations while reducing or eliminating tariffs) reached $21.5 billion in 2018 and now has crossed over the $20 billion mark in 2020 for the first time in history! In 2018, investment in India from South Korea crossed the benchmark of $1 billion for the first time, recording $1.053 billion. Korea’s total FDI (Foreign Direct Investment) to India till September 2020 stands at $6.94 billion. India’s investments in Korea are to the tune of approx. $3 billion led by Tata Daewoo, Ssangyongand Novelis.
Indian Prime Minister Narendra Modi’s visit to South Korea in May 2015 and the State visit of President Moon Jae-in in July 2018 to India were in favour for both the countries. It boosted bilateral engagement with a joint vision of people, peace, and prosperity. New targets and goals of achievements set by Prime Minister Modi and President Moon during this visit that bilateral trade are worth $50 billion to be achieved by 2030. To further strengthen bilateral ties, PM Narendra Modi visited ROK during 21-22 Feb 2019 and had a series of bilateral and business engagements.
According to India’s Embassy in Korea, India’s share in Korea’s global trade was 1.72% in 2020 and India’s contribution to Korea’s global imports increased from 0.78% in 2001 to 1.05% in 2020. India is Korea’s 21st biggest source of imports and 7th biggest export market as of 2020.
Major items of India’s export to Korea are mineral fuels/oil distillates (mainly naphtha), cereals, iron, and steel. Korea’s main exports to India are automobile parts, telecommunication equipment, hot rolled iron products, petroleum refined products, base lubricating oils, nuclear reactors, mechanical appliances, electrical machinery & parts, and iron & steel products.
South Korea‘s Investment in India
Companies like Hyundai Motor Group, Samsung Electronics, and LG Group have already made a position in Indian Market. Hyundai Motors and its automotive plant in Tamil Nadu, with a capacity to produce more than 650,000 cars annually make it Korea’s one of biggest investments in India. Hyundai Motors India Ltd, the Indian subsidiary of Hyundai Motors, is ready for its next tranche of investment. They are planning to expand, Sriperumbudur’s unit by investing $ 1.05 billion to manufacture electric vehicles.
Samsung Electronics is the Regional Headquarters for Samsung’s Southwest Asia operations. The Company has invested about $ 1.1 bn in India. It operates 2 manufacturing locations in Noida and Tamil Nadu, 5 R&D centres, and 1 Design Center. Samsung is also planning to invest INR 5000cr in its Noida plant. This Noida facility is the world’s largest mobile manufacturing unit, doubling its current capacity of 68 million to 120 million mobile phone units by 2020.
LG Electronics operates two factories in India, one each in Noida and Pune, with an R&D Centre in Bangalore. LG Electronics has 40,000 outlets across India; over 2,000 of them are standalone stores.
POSCO has set up cold-rolled, galvanized, and electrical steel production plants in Maharashtra with an investment of around $ 1 bn and also operates steel processing centres in Pune, Delhi, Chennai, and Hyderabad.
Lotte confectionary has spread further by acquiring Havmor, a Gujrat-based unit, besides its earliest investment in Chennai and recently in Rohtak.
India’s Investments in South Korea
Novelis Inc., a subsidiary of Hindalco Industries Ltd., the flagship company of the Aditya Birla Group, acquired Alcan TaihanAluminium Ltd. in January 2005. Novelis Inc. holds a 68% share amounting to about US$ 600 million in Novelis Korea Ltd, which is Asia’s number one manufacturer of aluminium rolled products with state of art production facilities in Yeongju and Ulsan and employs more than 1,200 employees. Novelis’ total investment in Korea is over $700 million.
Tata Motors Limited acquired Daewoo Commercial Vehicle based in Gunsan, Korea for a total price of KRW 120 billion (approximately $102 million) in March 2004. Its cumulative investment now is over $400 million.
Mahindra and Mahindra (M&M) in August 2010 acquired a majority stake in ailing Ssangyong Motors with an estimated investment of about $ 360 million. Its cumulative investment now has crossed $ 1.5 billion and it has made the acquired company profitable in 2016-17.
Nakhoda Ltd, one of the large Indian producers of yarn acquired Kyunghan Industry Company which has a capacity for 150 tons per day of partially oriented yarn (POY), 90 tons per day of fully drawn yarn, and 60 tons of polyester fibre, with an investment of $40 million.
In addition, Indian IT majors including Tata Consultancy Services (TCS), L&T Infotech, and Mahindra Tech set up operations in South Korea and have been serving both Korean and other foreign clientele in this country. What do you think about this economic relationship between India and South Korea? Tell us in the comments!