A soulmate in Seoul

Steel and energy needed for better India-Korea relations

Last week’s civil nuclear cooperation agreement between India and the Republic of Korea is a fitting culmination of the strategic engagement between the two countries that began close to two decades ago. While India and South Korea have both civilisational (ancient historical) links and more recent diplomatic links dating back to the partition of the Korean peninsula, the real meaningful contact between the two began with India opening itself up to Korean investments in the early 1990s. For a country that sent its economists in the early 1960s to India’s Planning Commission for training in long-term planning, South Korea had developed an impressive capability in the manufacturing sector that Indian consumers only discovered after 1993, following the visit of former Prime Minister P V Narasimha Rao to Seoul in that year. Within a decade, Korean brands like Hyundai, Samsung, LG and such like began to give well-established Japanese and western brands in the Indian market a run for their money. Today, few Indian consumers are unaware of Korean brand names. It was not, therefore, surprising that when India conducted nuclear tests in 1998, South Korea chose not to impose any economic sanctions on India, withstanding pressure from both the United States and Japan. India’s decision to sign a free trade agreement followed by its invitation to the South Korean President to be chief guest at the annual Republic Day celebrations this year, further sealed the strategic partnership between the two democracies.

There is much more that India and South Korea can do to widen and deepen their bilateral economic and strategic partnership. It is, therefore, a pity that a major South Korean project, the $12-billion Posco steel plant in Orissa, has not yet taken off. The sooner Posco steel plant is completed the better for Orissa, for India and for India-Korea relations. The state government must get its act together, take the people of Orissa along and implement the project that has not only iconic significance for the bilateral relationship, but has also the potential to transform the industrial landscape of Orissa. Instead of exporting iron ore to a steel manufacturing giant like China, India has the capability of becoming a steel manufacturing giant by itself if it can build more such plants. Steel consumption in India is still very low and must be increased several fold. Implementing the Posco project will help increase India’s steel production and add steel to the India-Korea relationship.