There were hopes in 2011 that total trade between South Korea and India could cross $30 billion by 2016. Would you like to revise these estimates today?
Trade relations between our two countries took on a more positive note in 2010 when we signed the CEPA (Comprehensive Economic Partnership Agreement) in 2010, which included the free trade agreement (FTA). It allowed for more focus on trade, reduction of import tariffs and we saw bilateral trade swelling to around $17 billion in 2010, and then to $20 billion in 2011. That was perhaps our best year. Then the economic slowdown in India began to hit us. We slipped to $18.9 billion in 2012, and have just reached $14.9 billion during January-October this year. It looks as if our figures could turn out to be lower than 2012 as well.
So, where is the silver lining?
Most of our exports are of auto parts, steel plates, petroleum products and electrical goods among others. All of them are closely related to the global economic climate. India, too, witnessed a slowdown during those years. But now, with the economic climate likely to improve in India during the coming months, we are quite optimistic about bilateral business between both our countries picking up. But that does not mean that our country will resume investments in a big way. During recession, Korean companies invest very conservatively. We see that conservatism easing. But it has not gone completely.
What are the biggest challenges you face?
Many Korean companies which had invested in China in the past are now looking at relocating themselves. In the beginning the market there was large and labour was cheap. But now labour has become expensive. So we are trying to find new locations for our companies engaged in the manufacture of textiles, footwear and a host of other things. We would like to do more in India, but conditions are not yet ripe for making that decision. For the time being we have begun shifting such industries to Vietnam, Cambodia and Laos. We think India is important – both politically and economically. We can make competitive products given the lower wages in India. And many Korean companies have already been doing their market surveys in this country.
India has excellent skills in areas relating to technology and science. It is a large market as well. Moreover, together, we can even explore markets in Africa. And we know that we are best in this middle ground. We are aware that China is already India’s largest trading partner. China wins markets on the basis of price. At the other end of the spectrum you have Japan – excellent quality and significantly higher prices. We come in between. We are the nut in the nutcracker. However, we think in the field of smart phones, we could emerge as a world leader.