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India - RoK Trade and Economic Relations
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Embassy of India

Brief on India-Korea Economic and Commercial Relations

1. Overview The trade and economic relations between India and Republic of Korea (Korea) have gatheredmomentum in recent years with bilateral trade reaching a substantial figure of $16.27 billion in 2015.India is the 13thlargest trade partner of Korea. Bilateral Comprehensive Economic Cooperation Agreement (CEPA) has spurred the process. Investments both ways are on the upswing.Korean majors such as Hyundai Motors, Samsung Electronics, LG, etc., which have invested around $ 3.91billiontill December 2015 in India, have plans to expand further.Actual Indian FDI led by Mahindra & Mahindra (Ssangyong Motors), Aditya Birla Group (Novelis Ltd.) & TATA (Tata Daewoo commercial vehicles) also is inching close to $ 3 billion.

Bilateral economic ties received a visible boost from the visit of Prime Minister Narendra Modi to Republic of Korea from 18-19 May 2015. India and Korea decided to commence negotiations to amend the CEPA by June 2016, strengthen cooperation on energy, electronics and shipbuilding industries, including setting up of a Joint Working Group for Cooperation on the Shipbuilding sector and another in the field of Electronics Hardware manufacturing. ROK offered to provide US$10 billion financing to India for priority projects. Recognising the importance of shipping industry in the bilateral relationship, PM also visited Shipyard of Hyundai Heavy Industries in Ulsan. PM & President Park addressed the inaugural session of India-Korea CEOs Forum to promote the bilateral economic cooperation, while PM also met the leadership of the top Korean conglomerates. Prime Minister also offered to create a “Korea Plus” group as a single window in India to address all the issues raised by Korean companies.

2. Status of Korean Economy and Synergies with India: In less than four decades Korea has achieved remarkable progress transforming its economy into an export-driven powerhouse. Its GDP has crossed $1 trillion from a mere US$ 2.3 billion in 1962, and now ranks the 11thlargest in the World. Its per capita income in 2015 was US $ 27,340. Services, Manufacturing and Agriculture account for 54.1 %, 26.3% &2.1% of its GDP respectively. (Source: Bank of Korea).The economic transformation has been achieved despite Korea's high dependence on import of natural resources including crude oil and essential minerals. Korea became the 29th member country of the Organization for Economic Cooperation and Development (OECD) in 1996. ROK is now the 5th largest exporter and 7th biggest importer in the world. In 2015, its exports rose by 2.3% to $572.7billion and imports also gained 1.9% to $525.5 billion. Over 40% of Korea's trade is with China, USA and Japan. Korea's other major trading partners are Vietnam, Hong Kong, Saudi Arabia, Taiwan,Australia, Germany, Singapore, and Indonesia. Korea has the world's 7thlargest foreign exchange reserves at $ 375.5billion as ofAugust 2016 (Source: Bank of Korea). It has the world's largest shipbuilding industry. It also ranks among the top producers of semiconductors and electronic products. A major auto manufacturer, Korea produces over 4.5 million vehicles annually.

3. India and ROK, having pursued different economic paths for development since their independence, currently share considerable synergies.ROK is an export-driven economy and is drawn by India's huge market.ROK developed considerable expertise in shipbuilding, steel, nuclear energy, heavy electrical machinery etc. and is keen to invest in India in these areas.Similarly, ROK wants to take advantage of India's prowess in IT software and to combine it with its expertise in IT hardware, designing, engineering and manufacturing.However, India has to diversify its export market, particularly focusing on high-tech products in addition to primary goods, if it has to penetrate the Korean import market.Even in textiles and garments where India used to have an edge, ROK has closed the gap and is exporting its own finished products to overseas markets. It is encouraging that the two countries are exploring commercial opportunities in space, defence and nuclear energy areas.

4. Bilateral Trade India's share in Korea's global trade was 1.68% in 2015,India's contribution in Korea's global imports increased from 0.78% in 2001 to 1% in 2015. India was Korea's 14th biggest source for imports in 2015 and its 7th biggest export market. Korea's trade surplus increased from US$ 1.98 billion in 2007 to about US$ 7.8 billion in 2015. In the last four decades, pattern of Korean exports has undergone significant transformation. Exports moved up the value chain from primary goods to light industrial products, to heavy industrial, high-tech and knowledge-based products. One barrier that India faces is Korea's restrictive policy towards import of primary agricultural products such as fruits and vegetables. These matters are being discussed in the annual CEPA review meetings. There is also a need for diversification of the export products which at present are driven overwhelmingly by petrochemical products, mainly Naphtha, which accounts for more than half of India's total exports to Korea.

5. As per statistics published by Korea International Trade Association (KITA), the bilateral trade between Korea and Indiais as under:

Amount in million US$


Total trade


Indian exports to ROK


ROK Export to India

































































2016 (till 31 Aug)







6. Major items of India's export to Korea are mineral fuels / oil distillates (mainly naphtha), cereals, iron and steel. Basic materials comprise the bulk of our exports, around 74% of total exports.However in 2015, due to the global economic slowdown, reduced prices for raw materials and the fall in international oil prices, worldwide trade volume felland also affected ROK's exports and imports. Imports from India dropped by -19.6% amounting to 4,241 million dollars in 2015. Naphtha has emerged as the most important single item of India's export to Korea commanding34.6% in 2014. However, due to the lower price of the oil in 2015, imports of Naphtha dropped to 51% and shared 21% of the total imports. Among increases in 2015,importsof electrical machinery and equipment (HS Code: 85), aluminium and articles (HS Code: 76) and medical and surgical instruments(HS Code:90)has registered 51.9%, 40.7% and 40.8% increase respectively.

7.Korea's main exports to India are automobile parts, telecommunication equipment, hot rolled iron products, petroleum refined products, base lubricating oils, nuclear reactors, mechanical appliances, electrical machinery & parts and iron & steel products.By product, exports of mobile communication devicesjumped 38.4% in 2015, whileflat-rolled products of iron or steel (hot rolled) and parts and accessories of the motor vehiclessurged34.8% and 9.3% respectively. Petroleum oils dropped36.2% and flat-rolled products of iron or steel (cold rolled) decreased 36.2%.

8. Comprehensive Economic Partnership Agreement (CEPA) Korea and India signed the Comprehensive Economic Partnership Agreement in Seoul on 7 August 2009 and was operationalized with effect from 1 January 2010. The CEPA is Korea's first free trade agreement with a member of the BRICS nations. The trade deal, which came after negotiations of more than three years and twelve rounds, commits the two countries to lowering or eliminating import tariffs on a wide range of goods over the next 8 years, and helps expand opportunities for investments and trade in goods as well as services. Korea is to phase out or reduce tariffs on 90 percent of Indian exports while India will phase out or cut tariffs on 85 percent of Korean exports.

9. CEPA classifies about 11,200 tariff lines of Korea and 5,200 tariff lines of India broadly into 6 categories for the purpose of reduction / elimination of tariffs. The categories include those which eliminate tariffs completely on implementation of the agreement and those with annual tariff reduction of 20% or 12.5%, and other categories under which final tariffs will be reduced to 1-5% after 8 years, and an exclusion category which will enjoy no tariff reduction. Most of the agricultural products and textiles, being sensitive to both sides, figure in exclusion category. Rice, beef, blue crab and sesame would not enjoy any reduction in tariffs. Tariffs on mangoes will be lowered to 15% from 30% while tariffs on turmeric will be reduced to 5% from 8%.

10. In addition, the CEPA agreement has allowed the opening of the services market. In case of India, the sectors covered include telecommunications, construction, distribution (retail excluded), transportation, industrial, accounting, building, real estate, medical treatment and energy distribution, etc. CEPA will also mutually expand job opportunities for computer specialists, engineers, managing consultants and assistant English teachers. In the financial services sector, India agreed for 10 Korean banks to establish branches in India. At present Shinhan Bank has four branches and Woori Bank has one branch.Hana Bank, and KB Kookmin Bank have set up their representative offices,Korea Bank of Exchange is in process of upgrading its representative Office to full branch. The CEPA allows temporary movement of 163 Indianprofessionals such as computer programmers and engineers etc. to access Korean services market.

11. During the first year of operation of CEPA in 2010, the bilateral trade between India and Korea increased by 40% to over US $17.57 billion. Indian exports rose by 37% in 2010 while Korean exports increased by 42.7%. In the 2nd year of implementation, i.e., by the end of 2011, the bilateral trade reached $ 20.57 billion recording a growth of 20.28%. In 2012 the bilateral trade came down to US$18.84bn.The main reason for fall in Korean export growth was the steep drop in ship sales. During 2014, due to the depreciation of Indian rupee and unstable economic climate, South Korea's imports from India dropped 14.7% to $5.28 billion dollars.2015 saw a global economic slowdown, reduced prices for raw materials and the fall in international oil prices,which reduced Korea's import from to India by 19.6 % to $4.24 billion

12. Joint CommitteeA Joint Committee at the Ministerial level headed by the Ministry of Commerce and Industry, India and the Korean Ministry of Trade, has been set up to undertake an annual review of CEPA implementation.The first meeting of the Committeewas held in New Delhi on 20 January 2011. Mr. Kim Jong-Hoon, Minister for Trade, and Mr. Anand Sharma, Minister of Commerce and Industry, co-chaired this meeting. It was agreed to establish a Joint Committee at the JS/DG level (Joint Secretary level for India and Director General level for Korea) also to assist the Ministerial Joint Committee in ensuring the effective operation and implementation of CEPA. It was further agreed to merge the erstwhile Joint Trade Committee established in 1987 into the Joint Committee under CEPA. The Indian side pointed out that Korea-EU FTA allows outsourcing of IT services in the financial sector and sought similar dispensation for India. It was also noted that the concessions made by ROK to the EU in their FTA far exceeded those made to India. The 2nd meeting of the Joint Committee at the Director General level was held on 29 September 2011 in Seoul. The two sides set up an adhoc Working Group which met in New Delhi in May2012.Both sides exchanged lists of tariff lines believed to havepotential for increased export.Another meeting at Director-level was held in Seoul, Korea on 11 July 2013. During the visit of President Park Geun-hye to India in January 2014, it was agreed to establish the "India-ROK Joint Trade and Investment Promotion Committee" at cabinet level to replace the current Ministerial Joint Committee. As agreed during the visit of Prime Minister Narendra Modi to ROK in May 2015, the Joint Committee meeting to review the India-Korea CEPA was held in New Delhi on 18 June 2016. It was co-chaired by India's Minister of State for Commerce & Industry Ms.NirmalaSitharaman and Mr.JooHyung-hwan, Minster of Trade, Industry & Energy from ROK. The Korea Plus, a special investment facilitation cell to provide hand holding services to Korean companies was launched by the two Ministers.

13. India-Korea Joint Commission:EAM paid an official visit to South Korea from 28-30 December 2014, and co-chaired the 8th session of India-ROK Joint Commission Meeting (JCM) with her counterpart Foreign Minister Yun Byung-se. During the visit, EAM called on President Park Geun-hye and held meetings with the Minister of Trade, Industry and Energy, the National Security Advisor and the Minister of National Defence. EAM and Korean FM comprehensively reviewed the developments in bilateral relations. EAM invited Korea to become an important partner in the ‘Make in India' initiative.

14. Korean Investments in India: Korean FDI to India (upto December 2015) stood at $3.9 billion, as per the Export-Import Bank of Korea, of which$198 million was received in 2010,$452 million in 2011,$311 million in 2012, $342 million in 2013, $325 million in 2014 and $314 million in 2015.The world's fourth largest steel maker POSCOproposes to invest $12 billion in an integrated steel plant in Orissa. There have been delays, but the pace of implementation has now picked up. Environmental clearance was accorded in January 2014 and most of the land for phase I has been acquired. Separately, POSCO has completed construction of its first steel mill in Maharashtra and set up another JV with Uttam Galva Group.The former entailed a total investment of $ 240 million for galvanized plate facility, whose production would cater to high-end galvanized needs of automakers in and around Pune besides those of home appliances companies.

15. Total FDI inflow from ROK since April 2000 has been estimated at $1.67 billion. Other Major Korean conglomerates which have invested in India are: Hyundai Motors which has set up an automotive plant in Chennai with a capacity to produce more than 650,000 cars annually; Samsung Electronics with centres in Delhi and Bengaluru, LG Electronics, Hyundai Mobis, Visteon Automotive Systems, andDoosan Corporation.Sector-wise, metallurgical industries command 24.13% of FDI inflows followed by the automobile industry with 11.75%.

16. Korean Model of Investment: According to Korea Trade Investment Promotion Agency (KOTRA), about 88% of all Korean subsidiaries established in India are wholly-owned while approximately 11.3% are joint ventures. The joint ventures are mostly between Korean companies themselves, and joint ventures with Indian companies are rare. This is mainly due to the indifferent experience in mid 1990s of Korean SMEs when they tried to enter India through JVs with Indian companies. Korean enterprises, including Hyundai Motors, LG, Samsung and Posco decided to have wholly owned subsidiaries with large scale investments, which allowed them to operate on economies of scale, establish their brand image at early stage, and gain negotiating power with local government. The Korean model of investment of working through wholly-owned subsidiaries is in contrast with the Japanese model which followed the typical process of technical tie ups → participation as minority stake holders→ expansion of stakes.

17. According to statistics of KOTRA and Korean Exim Bank, Korean investment in India is concentrated mainly in the manufacturing sectors which accounts for 85.4%, with wholesale and retail trade 6%, financial and insurance activities 1.1% and electricity, gas, steam and water supply 1.7%. Major centres of investment are NCR (Delhi, Noida, Gurgaon), Chennai, Mumbai /Pune. USA continues to be Korea's main investment destination with a total of $ 63 billion USD; and China its main destination in Asia with an overall investment of about $52.1 billion USD. (Source Exim Bank, Korea). Korea's worldwide investment is estimated to be about $309 billion (December, 2015).Korea's other major investment destinations are: Hong Kong - $ 17.8 billion and Vietnam - $ 12.7 billion. The average investment in India during the last four year period (2012-2015) was $ 323.2 million/year.

18. Korean Industrial Park in the State of RajasthanROK has proposed to establish a Korean Industrial Park in the State of Rajasthan.Details are in the process of being worked out between KOTRA and RIICO (Rajasthan State Industrial Development and Investment Corporation). An official delegation from Rajasthan visited Korea from 30 June -2 July 2015 and met the senior executives from Korean companies and trade associations such as Samsung Electronics, Lotte, KITA, KOTRA, FKI and others. The officials explained the investment environment and opportunities in Rajasthan and also about the allotment of industrial plots in Korean Investment Zone (KIZ) in Ghiloth.

19. CEOs ForumDuring the visit of President Park's visit to India in January, 2014 it was agreed to establish a CEO's Forum which would be mandated to submit a report on further enhancing economic cooperation to the two Governments. The first India ROK CEOs Forum was held in Seoul on 19 May 2015 in the presence of Prime Minister Narendra Modi and President Park.

20. Indian Investments in Korea: Indian investments in ROK up to 2012were about $ 1.3 billion with major ones being as follows:

  • Novelis Inc., a subsidiary of Hindalco Industries Ltd., the flagship company of the Aditya Birla Group, acquired Alcan TaihanAluminium Ltd. in January 2005.Novelis Inc. holds 68% share amounting to about US$ 600 million in Novelis Korea Ltd, which is Asia's number one manufacturer of aluminium rolled products with state of art production facilities in Yeongju and Ulsan, and employs more than 1,200 employees. Novelis' total investment in Korea is reportedly close to $2 billion.
  • Tata Motors Limited,acquired Daewoo Commercial Vehicle based in Gunsan, Korea for a total price of KRW 120 billion (approximately US$102 million) in March 2004.
  • Mahindra and Mahindra(M&M) in August 2010 acquired a majority stake in ailing Ssangyong Motors with an estimated investment of about $ 360 million. Its cumulative investment now has crossed $ 500 million.
  • Nakhoda Ltd, one of the large Indian producers of yarn acquired Kyunghan Industry Company which has a capacity for 150 tons per day of partially oriented yarn(POY), 90 tons per day of fully drawn yarn, and 60 tonsof polyester fibre, with an investment of $40 million.
  • M/s Creative Plastic, invested US$ 2 million in ROK and set up a 100% Alchemy Mold& Plastic Ltd. in Pyeongtaek.

In addition, Indian IT majors including Tata Consultancy Services (TCS), WIPRO, L&T Infotech and Mahindra Satyam set up operations in ROK and have been serving both Korean and other foreign clientele in this country.

21. Market Access for Indian Agricultural Products in KoreaTechnical data for Pest Risk Analysis (PRA) in respect of agricultural products including walnut, mangoes, grapes and vegetables such as Okra and Brinjal (aubergine) was submitted to the Korean authorities from time to time since September 2004. These are at different stages of processing.PRA process was completed only in respect of mangoes and export of Indian mangoes will begin by 2017.ROK also applied for PRA clearances for its pear, apple, grape and paprika and these are under consideration of the Indian authorities.

22.Tourism:The number of tourists from Korea travelling to India has been increasing in recent years. Around 100,000 Koreans visited India in 2014, attracted not only by the main tourist attractions like Taj Mahal and Jaipur, but also by the Buddhist sites.

23. Engagement between the Finance MinistriesKorean Minister Mr. Yoon,Jeung-Hyun visited India for the first Ministerial level meeting with the then Finance Minister ShriPranab Mukherjee in January 2011.During that meeting it was agreed to have regular ministerial-level interactions.A MOU to formalize and streamline the engagement was also proposed by the Korean side.Issues under discussion in this forum included: Taxation on Korean business operations in India; opening of bank branches; cooperation and exchange of expertise in tax evasion; cooperation between EXIM banks etc. Indian Finance Minister P. Chidambaram paid a reciprocal visit to ROK on 2-3 November 2012 for a meeting with his counterpart Minister Bahk Jae Wan.The issues discussed included: fiscal policy, taxation, customs clearance, public procurement and cooperation in infrastructure. The 4th round of discussions were held in New Delhi in January 2014. Exim Bank of India and the Exim Bank of Korea agreed to provide each other lists of suitable projects for co-financing in third countries, including those in Africa. During the visit of PM to Korea in May 2015, the Ministry of Strategy and Finance and the Export-Import Bank of Korea expressed their intention to provide US $10 billion for mutual cooperation in infrastructure, comprising Economic Development Cooperation Fund (US $ 1 billion) and export credits (US $ 9 billion) for priority sectors, including smart cities, railways, power generation and transmission, and other sectors to be agreed. The finance ministries and the EXIM Banks of the two countries have held discussions to finalise the envisioned financial support for priority sectors.

24. Double Taxation Avoidance Agreement:The revised Double Taxation Avoidance Agreement was signed during the State visit of Prime Minister Narendra Modi to Seoul on 18 May 2015.

25. Business Promotion and Road Shows by State Governments:With growing business and economic engagement, Indian states have been evincing increasing interest in attracting Korean FDI.In 2015, official and business delegations from a number of States of Indiavisited Republic of Korea.Amongst them, a delegation from Punjab led by Deputy Chief Minister visited in September 2015, while a Madhya Pradesh delegation led by Chief Minister Shivraj Singh Chauhanvisited in October 2015.

26. India-Korea Marine Supply Chain Forum was convened by the Embassy of India and the Indian Chamber of Commerce in Korea (ICCK) on 22 July 2015 in Busan, with the assistance of the Korea Marine Equipment Association (KOMEA) and Standard Chartered Bank Korea. Over 175 participants from Korea's shipbuilding component manufacturing industry, and leaders of India's largest private and public sector shipbuilding firms were present. The event was followed by nearly 60 business to business meetings, organised by ICCK, to facilitate early business outcomes.

27. India Korea Business Summit 2016: The Embassy in cooperation with the ChosunIlbo newspaper and CII assisted in organizing the India-Korea Business Summit in New Delhi from 14-16 January 2016. The leadership from the top conglomerates attended the summit meeting, which also included an exclusive roundtable meeting with the Hon'ble Prime Minister.

28. Roundtable on Investment Opportunities in Indian Infrastructurewas held on 19 January 2016 in partnership with IL&FS and Financial News at JW Marriott, Seoul. Some 40 representatives of various leading financial institutions in Korea attended the roundtable meeting, where they had an in-depth look at the Indian economy, India's infrastructure sector and the capabilities of IL&FS.

29. The Maritime India Summit 2016 was held in Mumbai from 14-16 April 2016 and the Republic of Korea participated as the sole partner country for this flagship event. Minister of Oceans and Fisheries Kim Young-sukled the Korean delegation as Special Envoy of President Park Geun-hye, and some 150 Koreans from over 50 companies, associations and institutions participated in the Summit. Korea's participation in the Summit has evinced interest in India's Maritime Sector, and several follow up measures are underway.A panel discussion on the maritime sector was held on 8 July 2016 in Busan in partnership with the Busan Chambers of Commerce and Industry as a follow up.

30.Gems & Jewellery Road Shows: Gems, diamonds and precious & semi-precious stones have emerged as an important export item from India to Korea ($70 million fromJan-Aug 2016 at a growth rate of 53.7 per cent) The Gems and Jewellery Export Promotion Council (GJEPC) mounted a Road show in Seoul on 10 June 2016 to invite Korean importers to participate in India International Jewellery Show (IIJS) in August 2016 in Mumbai. Over 50 Korean businessmen attended.

31.Indian Chamber of Commerce in Korea (ICCK): An Indian Chamber of Commerce in Korea was established in January 2010 to help Korean companies interested in doing business with India. ( As of 2015 ICCK has 34 companies as its members. ICCK has been actively assisting the Indian Embassy in hosting business related events. Mr. DilipSundaram, Country Head of Mahindra, is the Chairman of ICCK and Mr. Sockjoong Yoon, is the Secretary General. ICCK is holding periodic ‘Speakers Forum' on Indian Economy and investment opportunities in India, which has been attracting considerable interest among the Korean business community.ICCK has begun an ‘Investment Camp' tour to India to showcase opportunities in India and in June 2016, it took a team of over 20 companies to Tamil Nadu, Telangana and Rajasthan.

32.Korea Trade Investment Promotion Agency (KOTRA) has set up its branch offices in Delhi, Mumbai, Chennai and Bangalore. Korea International Trade Association (KITA) has also opened its office in Delhi and are actively assisting Korean businessmen doing business in India. It has been mounting trade missions to India and is also supporting business delegations from India to ROK. Korean Chambers such as KOTRA and Korean Chamber of Commerce & Industry (KCCI) have established institutional linkages with Indian Chambers like CII, FICCI, etc.

October 2016

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