India, South Korea eye upgrade in free trade agreement, ‘more balanced’ ties

E-PaperSubscribeSubscribeEnjoy unlimited accessSubscribe Now! Get features like India and South Korea have agreed to upgrade their existing free trade agreement, Union commerce minister Piyush Goyal on Monday said, adding that the two partners are working towards a “more balanced” partnership to address New Delhi’s concern over growing bilateral trade deficit. South Korean President Lee Jae Myung, and first lady Kim Hea Kyung, President Droupadi Murmu and Prime Minister Narendra Modi at the Rashtrapati Bhavan in New Delhi. (Hindustan Times/Arvind Yadav)Goyal’s comments follow Prime Minister Narendra Modi’s statement at the joint press conference with Republic of Korea President Lee Jae Myung earlier in the day that the two sides have taken “several important decisions” to boost their bilateral trade from $27 billion to $50 billion by 2030, including upgrading the India-Korea trade agreement “within the next one year”. India imported goods worth $21.06 billion from South Korea in 2024-25 and exported $5.82 billion, resulting in a trade deficit of $15.24 billion. The specific timeline to complete upgradation of the existing India-South Korea Comprehensive Economic Partnership Agreement (CEPA) is significant as negotiations for the same have gone on for almost a decade. After the Modi government came to power, it realized that certain FTAs signed previously were largely one-sided and weak on rules of origin, allowing products from a third country getting concessional duty access to India. On June 18, 2016, New Delhi and Seoul agreed to review CEPA to make it more comprehensive and balanced. Negotiations to upgrade the pact have thus far seen 11 rounds of meetings, the last of which took place in Seoul in July 2024. Talks are expected to gather pace after both sides appointed chief negotiators and the matter figured in the agenda of talks between Lee and Modi on Monday. India and South Korea signed CEPA in Seoul on August 7, 2009, and the agreement was operationalised on January 1, 2010. Speaking on bilateral trade at the India-Korea Business Forum during the Korean President’s New Delhi visit, Goyal said: “We have agreed to work on a fast-track, on a mission mode, to upgrade the comprehensive economic partnership, addressing several non-tariff barriers, make it easier to do business between the two countries, easing the rules of origin, expending the market access and opening up the doors in both countries so that we can aim to grow towards a more balanced economic partnership and not one, which is defined by very large trade deficits.” The event was jointly organised by FICCI and the Federation of Korean Industries (FKI). According to Goyal, prospects for bilateral trade and economic cooperation between India and South Korea is immense. “We have been tasked by our two leaders… that we should double this by 2030. That’s four years. So, we are looking at about 18% growth, if we have to double it in the next four years,” he said. He said given the size and scale of the opportunities the two countries have, this number may go much beyond $50 billion, the minister said, underscoring the “true potential” of this partnership. “The amount of effort that the leadership of the two countries is investing in this relationship..., I think, we need to focus on unlocking the next phase of this partnership, and towards that end this visit is going to be a very-very defining start of a new chapter.” Speaking at the forum, Lee said India, as the world’s fourth-largest economy and home to 1.4 billion people, stands as a key pillar of the global economy. There is significant scope to further expand business and trade, he said, adding that bilateral trade has considerable room for growth and, with sustained efforts, is expected to double alongside ongoing negotiations on the Comprehensive Economic Partnership Agreement.