India is in talks with yet another country to expand its trade partnership. This time it is South Korea, as ministers of both the states are preparing for a trade meeting.
On Tuesday, Commerce and industry minister Piyush Goyal and Korean trade minister Han-Koo Yeo will hold talks discussing various trade-related matters.
The most important matter that can come in their agenda is India’s concerns with trade imbalance with South Korea, the market access issues and non-tariff barriers. They will also discuss issues related to investment.
The ministry hopes that the meeting will boost Indian-South Korean trade relations in an equitable and balanced manner so that it will be mutually advantageous for both nations.
As of now, the bilateral trade is tilted towards South Korea. There is an FTA between the two that came into force in 2010. But only Korea has benefitted more than India from it.
In FY20 and FY21, India imported goods worth $15.7 billion and $12.8 billion, respectively from South Korea. But at the same time only exported $4.8 billion and $4.7 billion to it. Also, Indian exporters always complain about their huge non-tariff barriers.
India usually exports, aluminium, mineral fuels and organic chemicals to South Korea, along with talent and IT service transactions. At the same time, South Korea exports steel, capital, mobile electronic items and other consumer goods etc., to India.
South Korea is an important trade partner considering the kind of goods it exports to India. Thus, it is unwise to keep the trade lopsided.
That is why India is reviewing its FTA with Korea, which is named the Comprehensive Economic Partnership Agreement (CEPA).
When it comes to non-tariff barriers, South Korea is not alone in the venture, as nations like the US, China, Japan and EU member states have raised similar barriers too.
These NTBs are in place to hide their trade protectionism and discourage undesirable imports.
By doing this they can protect their trade without using tariffs.
India is seeking to be a trade power that can surpass China.
The long-time target rejuvenated after India pulled out of Chinese-dominated RCEP trade talks in November 2019. At the same time, the latter’s Belt and Road Project will harm India.
Thus, India needs to have a system that counters this movement on the trade front. This is the reason why the nation is leading the trade talks with developed and developing nations for a fair and balanced trade pact.
As of now UAE, USA, UK, Israel, Japan, ASEAN nations and Australia have given positive signs for trade with India. The trade agreement would be exploring the feasibility of reviewing or upgrading various existing trade agreements even going for EHAs.
India also has plans to boost its exports to reach the target of $1tn goods and service export by 2030.