Modi to pitch for higher FDI from South Korea
150 firms to participate in business summit today
Prime Minister Narendra Modi will hard sell India to companies from South Korea at an investment summit here on Tuesday.
Around 150 Korean companies from the automotive, heavy industry, food processing and textile sectors would be in Delhi for the event. Representatives of 200 Indian firms, Finance Minister Arun Jaitley and Commerce and Industry Minister Suresh Prabhu are also expected to participate.
Prime Minister Narendra Modi is expected to push Korean firms to expand the $2.55 billion worth of investment the East Asian country has in India, mostly in automobiles and engineering.
"Talks on trade and investments will also be held. Both governments expect to upgrade economic ties," a senior Korean diplomatic official said. The event would also see participation of a senior advisor to the Korean government, who is close to President Moon Jaein, he added.
India plans to upgrade its trade pact with South Korea, despite domestic industry claiming the 2009 agreement disproportionately favours that country. This follows Prabhu’s visit to Seoul last year to review the Comprehensive Economic Partnership Agreement (CEPA). Both parties had decided to finalise negotiations to upgrade the CEPA at the earliest, possibly before the end of 2018.
However, any move by India to widen the CEPA runs the risk of further angering domestic exporters. India imported $12.6 billion worth of goods from Korea in 2016-17. Export was only $4.2 billion.
“Korean companies such as Samsung and LG have penetrated deep into the Indian consumer goods market. Automobile major Hyundai has become the second largest manufacturer, a direct result of the CEPA,” a senior business leader from the Federation of Indian Chambers of Commerce and Industry said, requesting anonymity.
A senior commerce ministry official argued on Monday that focus on enhancing market access and strengthening of rules of origin would be key to improving the chances of exporters. That comes with some challenges. “While our import dependency can be brought down in major categories such as plastic and related products ($ 1.2 billion) and organic chemicals ($700 million), the same is not true for India’s reliance on machinery products ($2.8 billion) from South Korea or select iron and steel import ($1.5 billion) — the two largest import categories,” a Delhi-based trade expert said.
The issue of gold import from Korea would also be discussed within the larger framework of the CEPA. The Directorate General of Foreign Trade had in August 2017 notified withdrawal of the zero-duty import facility for gold, silver, and coins and articles. The facility was allegedly being misused to import duty-free gold from Korea since July 2017 when the goods and services tax came into effect.
Seoul has opposed India’s push for greater ease in services trade, and asked New Delhi to remove its tariff controls, during talks on economic and foreign trade agreements.