India and South Korea will begin a fresh round of negotiations to upgrade the CEPA (Comprehensive Economic Partnership Agreement) in May-June after the conclusion of the 10th round of negotiation earlier this year, two people aware of the matter said.
India has been seeking greater market access for some of its commodities like rice, steel, and shrimp, and also in sectors like healthcare and information technology (IT) in a bid to boost exports of Indian products in the Southeast Asian country, the first person mentioned above said requesting anonymity.
“Currently, the trade balance is heavily in favour of the Republic of Korea (South Korea),” the person added.
Eclipsed exports
South Korea and India signed the CEPA in Seoul in 2009 to increase economic exchange and facilitate trade between the countries.
The agreement, negotiated over 12 rounds and for over three years, came into effect from 2010.
However, India’s imports from South Korea have eclipsed exports to the country.
During calendar year (CY) 2023, India’s exports to South Korea stood at $6.286 billion, down 16.61% annually, while imports from the Southeast Asian country stood at $21.361 billion, up 3.19% annually, according to data from the ministry of commerce and industries.
“The government has raised concerns about the growing trade deficit between India and the Republic of Korea,” the first person mentioned above said.
“The upcoming negotiations will address some of the issues,” the person added.
Trade gap
India’s key trading partners in Asia include the ASEAN, Japan and South Korea.
India’s trade balance with all these countries/regions is in deficit, with imports exceeding exports.
Mint had on 17 April reported that India’s 2011 free trade deal (FTA) with Japan is likely to be reviewed in the coming months, with New Delhi keen to minimize the trade deficit with Tokyo.
During CY23, India’s imports from Japan stood at $17.506 billion, while Indian exports to Japan stood at $5.084 billion, according to the Commerce Ministry data.
Japan’s exports to India have doubled since 2010-11, when it stood at $8.62 billion, while India’s exports to Japan have largely remained static.
The commerce ministry spokesperson didn’t respond to emailed queries.
The analysis of India’s three key Free Trade Agreements (FTAs) with ASEAN, South Korea, and Japan, signed in 2010-2011, reveals India’s merchandise trade deficit with these partners increased significantly more than its global trade deficit, and India’s exports to these FTA partners have increased at a lower rate than its imports, economic think tank Global Trade Research Initiative (GTRI) said in a recent report.
“Many Indian firms choose not to use the FTA route when (Korean) duties are low, as FTA-related compliance costs do not justify the tariff benefits,” the report said.
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Published: 24 Apr 2024, 04:36 PM IST