Govt reviewing trade pact with S Korea

Special mechanism to facilitate investments to be unveiled

The government was reviewing the trade agreement with South Korea and would update it soon, Commerce and Industry Minister Nirmala Sitharaman said on Friday.

A mechanism to facilitate South Korean investment would be launched by the government on Saturday, the minister said at an event organised by the Federation of Indian Chambers of Commerce and Industry and Korea Trade & Investment Promotion Agency.

"We hope to conduct an intensive exercise that can be concluded in favour of both countries. It will require quite a few assessments of the benefits derived by both countries under the existing CEPA (comprehensive economic partnership agreement)," Sitharaman said.

India's CEPA with South Korea was implemented in January 2010 to liberalise trade norms. Bilateral trade, estimated at $16.58 billion in 2015-16, is heavily in favour of South Korea. India's exports to South Korea fell nearly 23 per cent in 2015-16 to $3.54 billion.

Indian companies have sought a review of trade agreements with other nations that they claim have benefitted the country's trading partners more. They have pointed to steel products, which they said should be excluded from the free trade agreements (FTAs) with Japan and South Korea because these countries were flooding the Indian market.

South Korean Minister for Trade, Industry and Energy Hyunghwan Joo also favoured a review of the CEPA.

"The CEPA suffers low utilisation rates due to complex rules of origin and low level of concessions," Joo said. Only 62 per cent of South Korean exports to India enjoyed the trade benefits, he added.

South Korea had earlier demanded more products like machinery and certain kinds of steel be included in the agreement. India's major exports to South Korea are aluminium, organic chemicals, and iron and steel.

India is South Korea's ninth largest trading partner. Both nations want to increase South Korean investments in India, which were estimated at $1.67 billion between 2000 and 2015.

The exclusive mechanism for South Korean companies planning to invest In India, called Korea Plus, is expected to streamline investment as well as operations. A similar framework for Japan has been operational since October 2014.

Joo said 450 South Korean firms had a presence in India and these provided 200,000 job opportunities here. Over 100 Indian companies have a presence in South Korea.