INDIA, KOREA SHOULD AIM AT ANNUAL TRADE OF 10 BILLION DOLLARS WITHIN THREE YEARS AND AVERAGE ANNUAL FDI
OF ONE BILLION DOLLARS
Date : 05 Oct 2004
Location : New Delhi
Shri Kamal Nath, Union Minister of Commerce & Industry, has said that India and Korea should aim for a relatively evenly balanced total annual trade of US $ 10 billion within three years and a sustained average annual Foreign Direct Investment (FDI) of one billion dollars. "These are not impossible targets.. I know we can achieve it if we go about our tasks with single minded determination", he said while addressing the Business Meeting organised by the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) here this afternoon on the occasion of the state visit of Mr. Roh Moo-Hyun, President of Republic of Korea (ROK). Mr. Lee Hee Beom, Korean Minister of Commerce, Industry & Energy, who later called on Shri Kamal Nath, was also present on the occasion. Referring to the proposed Comprehensive Economic Partnership between India and Korea, Shri Kamal Nath suggested that the group which would discuss the framework of the economic partnership should go about its work in a target oriented manner by first defining the target and the time frame and then working out the best way to achieve the annual trade target of 10 billion dollars and annual FDI of one billion dollars.
Stating that India attaches great importance to her relationship with Korea – both political as well as economic – Shri Kamal Nath noted that the total trade between India and the Republic of Korea last year stood at around $ 3.3 billion. "This respectable figure, however, hides two truths which bear analysis. The first issue to be noted is that of the total trade, India’s exports were only 800 million dollars, whereas imports from Korea were 2.5 billion dollars; thus the balance of trade was heavily skewed. This, in itself, is not necessarily a bad thing, as there is nothing wrong with imports. India’s foreign exchange reserves position is comfortable, and increased imports demonstrate the confidence and requirements of a growing economy. However, closer scrutiny shows that this spurt was largely due to the import of a number of coaches for the Delhi Metro – now we can’t expect the Delhi Metro to go on indefinitely and sustain our bilateral trade! We should – and must – find other avenues", the Minister said.
The trade basket shows that India’s exports to Korea comprised a high proportion of primary products viz., agri products and dyes & pharmaceuticals whereas the major items of India’s imports from Korea are industrial goods like electronics, machinery and transport equipments. Stressing the need to diversify the basket, Shri Kamal Nath flagged the concern of Indian exporters by stating that "the sanitary & phyto-sanitary and the non-tariff barriers imposed by the ROK create impediments in increasing the volume of our exports. No such barriers restrict the import of manufactured goods from Korea to India. I would request that a closer look be taken at the SPS regulations, insofar as they apply to India at least, with a view to rationalising them, and minimising, indeed eliminating, non-tariff barriers".
As regards investment, the Minister said that although Korea was the seventh largest country in India, cumulative FDI inflow from Korea during the last 13 years was only about 3% of India’s total inflows and it did not account for even one billion dollars. Given that Korean brands, especially in the electronic and transportation industries, have become house-holdings in India, "there is no reason why FDI should not increase in leaps and bounds. I understand that the outward investment by South Korea annually is 3 billion dollars. India wants at least a third of that, i.e. one billion dollars a year investment should be what we must aim for", Shri Kamal Nath said.