Korean firms urged to set up manufacturing and R&D bases in In­dia

FICCI Business Digest - - Contents -

A mitabh Kant, Sec­re­tary, Depart­ment of In­dus­trial Pol­icy & Pro­mo­tion (DIPP), Min­istry of Com­merce and Industry, ex­horted Korean com­pa­nies to look ahead of the curve, in­vest and set up manufacturing and R&D bases in In­dia as this coun­try quicken its strides to touch dou­ble-digit growth rate in three to four years.

Speak­ing at a busi­ness meet­ing on 'Make in In­dia: Con­tri­bu­tion of Korean Com­pa­nies', or­gan­ised by FICCI, Korea In­ter­na­tional Trade As­so­ci­a­tion (KITA) and Korean Cham­ber of Com­merce In­dia (Kocham In­dia) in New Delhi on May 8, 2015, Kant said, “The fu­ture for Korean com­pa­nies is not in Korea. It is in In­dia both for manufacturing for the do­mes­tic mar­ket and for ex­port.” Korean com­pa­nies, he added, would do well to drop an­chor in In­dia as three to four years from now the grow­ing In­dian econ­omy would have at­tracted large and small com­pa­nies from across the de­vel­oped world and it would be too late to scout for manufacturing op­por­tu­ni­ties then.

He said that In­dia was fo­cus­ing on manufacturing, dig­i­tal tech­nolo­gies and skill de­vel­op­ment and the three

pro­grammes will con­verge and in­te­grate with one an­other. “We are not just look­ing East, we are act­ing East, the In­dian econ­omy is grow­ing by 7% and in the long term, GDP is ex­pected to grow be­tween 9% and 10%.”

Kant said that In­dia would like to see small and medium Korean com­pa­nies set up manufacturing bases in this coun­try and “we can cre­ate 'plug and play' fa­cil­i­ties for them.”Rais­ing the pitch for 'Make in In­dia', Kant said that it is time for Hyundai Mo­tor to set up a sec­ond plant in In­dia, and turned to Hyundai MD & CEO and said, “If you don't set up your sec­ond plant now, you will re­gret it later.”

Dr. Jy­ot­sna Suri, Pres­i­dent, FICCI, in her re­marks, pointed out that Korea was one of the first coun­tries to re­alise the po­ten­tial of In­dia as a manufacturing des­ti­na­tion. Korean in­vest­ment in In­dia is con­cen­trated mainly in the manufacturing sec­tor which ac­counts for 86 per cent, with whole­sale and re­tail trade 6 per cent, con­struc­tion 1.2 per cent and financial and in­sur­ance ac­tiv­i­ties 1.3 per cent.

The Korean com­pa­nies' faith in the In­dia growth story is clearly re­flected in the choice of In­dia as a launch pad for Korean global au­to­mo­tive of­fer­ings, in­clud­ing an ex­port hub for Hyundai Mo­tors which has been ex­port­ing a sig­nif­i­cant chunk of its 'Made in In­dia' ve­hi­cles.

She said other ma­jor Korean brands such as Sam­sung and LG have made sig­nif­i­cant con­nect with In­dian con­sumers. Their model has been to op­er­ate through wholly owned sub­sidiaries with large scale in­vest­ments, which al­lowed them to op­er­ate on economies of scale and es­tab­lish their brand im­age at early stage.

Dr. Suri said that Korean com­pa­nies are bring­ing in cap­i­tal, cut­ting-edge tech­nol­ogy and gen­er­at­ing em­ploy­ment in In­dia. Ac­cord­ing to Korean Exim Bank, Korean com­pa­nies have in­vested more than US$ 3.5 bil­lion in In­dia till De­cem­ber 2014 and 641 Korean com­pa­nies have in­vested in In­dia. How­ever, when you con­sider Korea's world­wide in­vest­ment which is es­ti­mated to be about $270 bil­lion, there is a scope to in­vest a lot more in In­dia. “We look for­ward to more Korean in­vest­ments in Delhi Mum­bai In­dus­trial Cor­ri­dor, Na­tional In­dus­trial Manufacturing Zones and smart ci­ties as well as in ar­eas other than manufacturing such as IT and ser­vices.”

She Bo Shin, Man­ag­ing Di­rec­tor & CEO, Hyundai Mo­tor & Chair­man, Kocham In­dia, said that this was the most op­por­tune time for Korean com­pa­nies to ex­pand their manufacturing and ex­port ca­pac­ity and iden­ti­fied au­to­mo­biles, ship­build­ing, elec­tron­ics, IT, defence pro­duc­tion, in­fras­truc­ture and en­ergy as the po­ten­tial sec­tors for in­vest­ment in In­dia.

Je­hak Jang, Min­is­ter Coun­sel­lor (Eco­nomic), Em­bassy of the Peo­ple's Re­pub­lic of Korea in In­dia, said, “In­dia was go­ing through a par­a­digm shift in eco­nomic pol­icy mak­ing, adding that Prime Min­is­ter Modi had un­leashed a wave of op­ti­mism on in­vest­ment prospects in In­dia.” Korea, he said, was go­ing to set up an in­dus­trial park in Ra­jasthan and added that his coun­try could be a valu­able part­ner of In­dia, pow­ered by skill, scale and speed. Given a con­ducive en­vi­ron­ment, Korean com­pa­nies would shift their op­er­a­tions to In­dia, he added.

Soonki Kang, Chief Rep­re­sen­ta­tive, Korea Exim Bank, on 'Trends and Sta­tus of Korea's in­vest­ment in In­dia', al­luded to lessons learnt from Korea's FDI ex­pe­ri­ence in In­dia. Th­ese in­cluded lack of ad­e­quate busi­ness in­for­ma­tion and in­fras­truc­ture char­ac­terised by dif­fi­culty in col­lat­ing in­for­ma­tion and iden­ti­fi­ca­tion of prom­i­nent manufacturing sec­tors, am­bi­gu­ity in gov­ern­ment pol­icy, in­suf­fi­cient in­for­ma­tion on mar­ket trends, dif­fi­cul­ties in land ac­qui­si­tion, lack of qual­ity in­fras­truc­ture and dif­fi­culty in iden­ti­fi­ca­tion of suit­able joint ven­ture part­ner in In­dian busi­ness so­ci­ety.

Pre­sen­ta­tions were made on var­i­ous sec­tors of the In­dian econ­omy by Pankaj Ti­wari, Vice Pres­i­dent Hyundai Mo­tor; Ro­hit Tyagi, Deputy Gen­eral Man­ager, Hyosung; Suren­dra Ku­mar Gole, Project Man­ager, KC Cot­trell; Surekha, Mar­ket­ing Head, Eland; Kenny Shin, Di­rec­tor & CEO, Shop CJ; and Jisang Yoo, CEO, Mi­rae As­set. Deepak Bagla, Man­ag­ing Di­rec­tor & CEO, In­vest In­dia, gave the con­clud­ing re­marks.

“Given In­dia's huge en­ergy re­quire­ments, there is tremen­dous scope to col­lab­o­rate with South Korea in ar­eas such as tech­nol­ogy trans­fer re­lat­ing to su­per­crit­i­cal boil­ers and clean coal tech­nolo­gies, nu­clear en­ergy and joint de­vel­op­ment of LNG ships with es­tab­lished play­ers in South Korea.” “The 'Dig­i­tal In­dia' pro­gramme puts In­dia on track to en­hance dig­i­tal con­nec­tiv­ity for de­liv­ery of gov­ern­ment ser­vices to its cit­i­zens. This will mean a higher spend on tech­nol­ogy, in­clud­ing in­ter­net ser­vices, soft­ware, data cen­tres, de­vices and telecom ser­vices by lo­cal and na­tional gov­ern­ments. This should lure Korean busi­nesses.”

Amitabh Kant, Sec­re­tary, Depart­ment of In­dus­trial Pol­icy & Pro­mo­tion, Min­istry of Com­merce and Industry (8th from right), with industry cap­tains from In­dia and Korea.

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