Korea focus on India
India could emerge as an alternative export market to China for South Korea amid a diplomatic row between #Seoul and #Beijing over the deployment of a #Terminal High Altitude Area Defense battery here, #The Korea Times reported 7 Mar 2017.
Although Korea and India forged a bilateral trade deal, the #Comprehensive Economic Partnership Agreement (CEPA) in 2010, the two sides have not yet fully explored the potential of each other’s markets, said Seoul-based analysts.
India is Korea’s 8th biggest export destination with the former’s outbound shipment to the latter amounting to only about US$12 billion in 2015, according to the #Korea Trade-Investment Promotion Agency.
Korea’s investment in India stood at US$4 billion last year. Its main export items to India are budget smartphones, electronic parts, automobiles and petrochemicals.
However, Seoul is seeking to expand its partnership as the two sides resumed negotiations to upgrade the CEPA last month. The two sides began their negotiations last year.
This comes amid positive forecasts for the Indian economy, which is expected to grow around 7 percent annually over the next decade. India grew 7.62 percent last year, according to the #International Monetary Fund.
“The negotiation reflects the need for Korea to diversify its trade with and investment in India, which has the potential to grow 7 percent, amid growing uncertainty and protectionism,” the #Ministry of Trade, Industry and Energy said in a statement.
Samsung Asset Management, which manages equity funds investing in India, said that India is “emerging as a global alternative manufacturing center to China.”
Investors should approach India with a long-term perspective, it added.
India is seeking to widen the scope of bilateral trade as it wants to reduce its deficit with Korea by increasing exports of new goods such as textiles and pharmaceuticals to Korea. India’s trade deficit with Korea increased to about US$8 billion in 2014, from US$5 billion after the CEPA went into effect in January 2010.
Korea’s exports to China have been falling since 2014 when outbound shipments to the world’s second-largest economy dropped 0.4 percent. In 2015, they declined 5.6 percent, and 9.3 percent last year.
Nevertheless, Korea’s exports to China account for about 25 percent of the total. The diplomatic spat over the THAAD anti-missile defense system has negatively spilled over to the Korean economy as China has been banning Chinese tourism to Korea and imports of Korean content, fashion and cosmetics goods.
“Korea will inevitably see a further drop in exports to China, which has upped the ante against Korean products,” The Korea Times quoted Kim Ji-man, an analyst at #HMC Investment Securities. fii-news.com
