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