India and Korea to discuss greater trade balance today

India and South Korea will hold talks on Tuesday, which will focus on New Delhi’s concerns over trade imbalance with Seoul, market access issues and non-tariff barriers (NTBs).

Trade and Industry Minister Piyush Goyal and Korean Trade Minister Han-koo Yeo will also discuss investment-related issues. “The meeting is expected to further strengthen India-Korea trade relations in a fair and balanced manner to the mutual benefit of both countries,” the commerce ministry said in a statement.

Bilateral trade has tipped strongly in favor of Korea. While Korea has managed to reap the benefits of its free trade agreement with India, which came into force in 2010, Indian exporters have not really benefited.

India imported goods worth $15.7 billion and $12.8 billion, respectively, from Korea in FY20 and FY21, but its exports to the country reached only $4.8 billion and $4.7 billion during this period. Additionally, Indian exporters have complained of huge non-tariff barriers there.

India mainly ships aluminium, mineral fuels and organic chemicals to Korea and imports steel, capital goods and consumer goods from there, among others.

The substantial trade imbalance has prompted India to consider revising the FTA, officially called the Comprehensive Economic Partnership Agreement. Regarding non-tariff measures, FE had previously reported that major developed and developing countries, such as the United States, China, South Korea, Japan and those in the EU, had erected huge NTBs to mask the ferocity of their trade protectionism and discourage “unwanted imports”, even though they claim to maintain a low tariff regime.

Since pulling out of Beijing-dominated RCEP trade talks in November 2019, India has been seeking to accelerate talks with key economies for “fair” and “balanced” trade pacts.

While India has stepped up negotiations with the UAE, Australia and the UK for FTAs, it has also explored the possibility of revising or upgrading various existing trade agreements.

In this context, India is seeking to review its FTAs ​​with ASEAN, Japan and South Korea to make them more balanced.