The Commerce Ministry of India is in active discussions with South Korea to upgrade the existing Free Trade Agreement (FTA), known as the Comprehensive Economic Partnership Agreement (CEPA). Engaging with various ministries including heavy industries, steel, and chemicals, the ministry is preparing an offer list as part of the ongoing negotiations. The CEPA, operational since January 2010, has seen ten rounds of talks to date.
India is seeking greater market access for products like steel, rice, and shrimp to enhance exports. Issues have been raised regarding South Korean firms’ reluctance to purchase Indian steel. The upgrade aims to strengthen economic cooperation between the two nations by reducing or eliminating customs duties on numerous goods, promoting trade in services, and boosting investments.
The trade deficit between India and South Korea has been a concern, with India’s exports to Korea decreasing from $8 billion in 2021-22 to $6.41 billion in 2023-24, while imports remained high at $21.13 billion in the last fiscal year. According to the Global Trade Research Initiative (GTRI), the trade deficit with South Korea has risen significantly since the implementation of CEPA.
Indian exporters face non-tariff barriers in South Korea, such as stringent standards and certification requirements. India seeks better market access for agricultural products and greater liberalization in sectors like healthcare and IT. Ensuring mutual recognition of standards and more meaningful tariff concessions from South Korea are key objectives in the negotiations.
Source: Business Standard