Seoul’s profile is rising in New Delhi’s diplomatic diary, write KV Kesavan and Vindu Mai Chotani
Prime Minister Narendra Modi has been vigorously promoting his Act East policy ever since he came to power. His recent three-nation trip to China, Mongolia and South Korea was part of that drive towards the East. The media has understandably focussed a great deal of attention especially on his visit to China, but his sojourn to South Korea, also a key component of his Act East policy, has not received as much publicity as it deserves.
Mr Modi is no stranger to South Korea, having visited that country in 2007 when he was the Chief Minister of Gujarat. He took a big delegation of industrialists and business people to Seoul to explore the prospects of attracting Korean private investment to Gujarat. As Prime Minister, he met President Park Geun-hye at the East Asia Summit in Myanmar in November 2014.
India's engagements with the Republic of Korea have witnessed some significant milestones in recent years. Their economic and security interests converge across a wide range of subjects including counter terrorism, maritime security, UN reforms, nuclear non-proliferation and energy cooperation. Both are interested in an open, balanced and inclusive regional architecture in the Asia-Pacific. In particular, since both depend on sea-borne trade for economic prosperity, they are committed to ensuring freedom of navigation and unimpeded commerce in the high seas. They also signed an agreement in 2006 for cooperative measures against transnational crimes and piracy. They were subsequently joined by Japan and China to undertake anti-piracy operations in the Gulf of Aden.
As for bilateral relations, India and South Korea forged a strategic partnership in 2010 and followed it up by signing a Comprehensive Economic Partnership Agreement. In 2011, their trade volume reached a high $20 billion, but tended to decrease. South Korea's private investment in India quickly picked up and has reached a total of three billion dollars. South Korean companies have made a great impact in the automobile and electronics sectors of the Indian economy.
What are the main takeaways from Mr Modi's present visitIJ The joint statement made by Prime Minister Modi and President Park testifies to the expanding dimensions of the partnership. They upgraded the bilateral engagement to a “special strategic partnership” and decided to add “new substance, speed and content” in such areas as foreign affairs, defence, trade and investment. They have agreed to hold annual summit meetings of their top leaders alternately in New Delhi or Seoul or on the sidelines of plurilateral events. Further, the foreign Ministers of the two countries, who have been meeting regularly, will be meeting annually in a structured framework. The leaders have also agreed to strengthen consultations between their National Security Councils on security, defence and cyber related issues. South Korea will be the second country with which India will have Joint Vice Ministerial-level defence and foreign affairs dialogue in the 2+2 format.
One of Mr Modi's abiding interests is to invite foreign investment to India for bolstering his Make in India programme. During his South Korea trip, he met Korean business leaders and explained his Government's policies on a comprehensive programme of economic modernisation. Impressed by Mr Modi's vision, the EXIM Bank of Korea has agreed to provide $10 billion for mutual cooperation in priority sectors including smart cities, railways, power generation and transmission.
India is also interested in using Korea's expertise to modernise its shipbuilding industry. Since Korea is a global leader in ship-building, it can help India in the construction of vessels like lNG carriers. Both countries have decided to constitute a Joint Working Group including Government and private sectors to work out measures for cooperation in this sphere.
Defence and civil nuclear power are the other areas that offer bright prospects for cooperation. India's Defence Minister Manohar Parrikar visited Seoul in April and highlighted that the defence industry in India was well poised to offer $250 billion worth of business over the next decade. Further, since the Modi Government has welcomed foreign investment in the defence field in a big way, he urged Korean defence firms to take advantage of this opportunity to enter the Indian market as long term partners.
As for civilian nuclear cooperation, both countries signed an agreement in 2011, but nothing positive has emerged from the accord though Seoul is keen to sell its reactors to India. Korea's interest in the subject has become deeper now, as it is competing with Japan in the supply of nuclear reactors. A new bilateral chief executive officers’ forum was launched at the time of Mr Modi's visit. This could play a critical role in expanding investment and trade.
India-Korea trade has not expanded despite the signing of the Comprehensive Economic Partnership Agreement. Bilateral trade has the potential of reaching $100 billion by 2020. But many want the CEPA to be upgraded to realise that goal. Only about 40 per cent of the trade agreement's capacity is probably being used because the tariff concessions under the CEPA are not competitive. This creates discouragement for companies to use the CEPA. Many Koreans want India to make its tariff line more attractive and liberal.
(KV Kesavan is a Distinguished Fellow and Vindu Mai Chotani is a Research Assistant at the Observer Research Foundation, New Delhi)