The Hindu : S. Korea, India identify key areas for mutual benefit

Online edition of India's National Newspaper
Tuesday, Apr 15, 2003

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Business

S. Korea, India identify key areas for mutual benefit

By Our Special Correspondent

CHENNAI APRIL 14 . The Republic of Korea and India look for greater economic cooperation, including in information technology, according to the South Korean Ambassador, Kwoon Soon-Tae.

"Korea is strong in IT hardware and is interested in tapping Indian skills in software for cooperation for mutual benefit,'' the Ambassador said, addressing a press conference during his recent visit here.

Among many high-level delegations planned in the coming months is one due to attend the second IT ministerial meeting in Delhi in September, he said.

The Ambassador pointed out that since the opening up of the Indian economy in 1991, South Korean companies started to invest in India in sectors such as automobiles and consumer goods like colour TV, washing machines, refrigerators, air conditioners, microwaves and audio and video systems.

South Korea's cumulative investment in India as per FDI approvals rose from a mere $2.5 million in 1991 to $2.3 billion in 2002, making it the fifth largest investor in India after the U.S., Mauritius, the U.K. and Japan. LG, Samsung and Hyundai had become household names in India.

With a "cutting edge'' in the field of construction, some South Korean companies were also involved in the development of projects like highways, power plants, chemicals, petrochemicals and metro rail.

Companies like Hyundai Heavy Industry, Daewoo Shipbuilding and Marine and Engineering and Samsung Heavy Industry had contributed to offshore projects and supplied oil tankers, cargo ships and LNG carriers.

From a poverty-stricken agricultural economy with a per capita income of $82 in 1961, South Korea had industrialised its economy and joined the ranks of OECD countries with a per capita income of $9,628 in 2000. Considering its lack of natural resources and limited domestic market, "this economic achievement has been unprecedented,'' South Korean officials said.

Until the mid-1990s, the Republic of Korea's accelerated economic growth was based mainly on manufacturing industries, which relied on traditional factors of production such as labour and capital.

However, in the wake of competition from other developing economies and as also developed countries as a result of globalisation, the country shifted from cost-focussed to efficiency-focussed policies, while the orientation of its economy had changed from manufacturing to knowledge-based operations, thanks to the development of information technology. The IT and communications industry had emerged as the main pillar of the South Korean economy, accounting for 13 per cent of the gross domestic product (GDP) and 25 per cent of exports.

However, bilateral trade with India was still modest, considering the size of both the economies, and stood at $2.6 billion in 2002 (against $2.1 billion in 1999).

Though South Korea continued to enjoy a trade surplus with India, the surplus was on a steady decline, from $594 million in 1999 to $135 million in 2002.

Its imports from India were led by naphtha, natural fibre yarn, botanical materials, iron ore and chemical raw materials, while exports to India included wireless communication equipment, vessel and auto parts, computer, steel plates, general machinery and electronic parts.

South Korea's trade with India accounted for only 0.84 per cent of its total trade, while the corresponding figure for India was 2.2 per cent.

Tourist exchanges were picking up, with a total of 24,135 Koreans visiting India and 24,201 Indians visiting Korea in 2001. Two South Korean airlines, Korean Air and Asiana, had round trip flights twice a week each from Seoul (Inchon) to Mumbai and Delhi, the officials pointed out.

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