The Big Picture – India-South Korea Ties: Where is it Heading?
Prime Minister Modi’s recent visit to South Korea is being analyzed with great deal of interest. Prime Minster’s vist to South Korea following visits to China and Mongolia is interesting because Mongolia and South Korea do not see China as a very friendly neighbour. India’s ties with South Korea, though it has been steadily growing over the years since it was established in 1973, has not reached the potential accoridng to most observers and analysts. It is acknowledged that South Korea with its economic strength and manufacturing facilities can be an ideal economic partner to India. In recent years, even the defence and strategic ties between the two countries are being enhanced. South Korea is currently the fifth largest source of investment in India.
Both the countries signed seven bilateral agreements including on avoidance of double taxation and formalising consultations between National Security Councils of the two nations, to boost bilateral ties, and agreed to upgrade ties to special strategic partnership.
Important agreements signed:
- The India-South Korea Double Taxation Avoidance Convention signed in 1985 has been revised with a view to avoiding the burden of double taxation on taxpayers in the two countries.
- The two nations agreed to cooperate in audio-visual co-production. The agreement in this regard is being signed under the provisions of India-South Korea Comprehensive Economic Partnership Agreement (CEPA) and would enable co-production of films, animation and broadcasting programmes. The pact calls for treating co-productions as national products in both countries and making them eligible for the same benefits as domestic titles. Among the various terms specified in the treaty, to qualify as a co-production, 20% or more of a film’s production budget must be from the partner country and 30% in the case of broadcast programs.
- The two nations signed an MoU for cooperation between the National Security Council Secretariat of India and the Office of National Security of South Korea. This would formalise consultations between National Security Councils of the two countries in a number of areas.
- An MoU was signed between the Ministry of Power and the Ministry of Trade, Industry and Energy of South Korea on cooperation in the field of electric power development and new energy industries. The agreement envisages cooperation in areas such as renewable energy, smart grids and power information and technology, transmission and distribution of electric power, energy efficiency and storage system.
- The two nations signed an MoU to strengthen and encourage cooperation on youth matters through participation in events and activities through exchanges, international conferences, seminars, youth camps, festivals etc.
- The two sides also signed Framework of Cooperation (FOC) in the Field of Road Transport and Highways. The FoC envisages cooperation in areas including road policies, design and construction, road operation, road management and safety, intelligent transport systems and electronic toll collection systems.
- The MoU on cooperation between the two countries in the fields of maritime transport and logistics including through sharing of technologies, information and experiences, the training of seafarers, exchange of experts and port operations etc was also signed.
The Ministry of Strategy and Finance and the Export- Import Bank of Korea have also expressed their intention to provide USD 10 billion for mutual cooperation in infrastructure. Of the USD 10 billion, USD 9 billion would come as export credit for priority sectors, including smart cities, railways, while USD 1 billion would be Economic Development Cooperation Fund. The two governments and the EXIM Banks of the two countries will hold consultations to chalk out a roadmap in order to materialise the envisioned financial support for priority sectors. It was also decided to constitute a Joint Working Group that includes the government and private sectors of the two countries which will facilitate co-operation in the shipbuilding sector.
With this, Prime Minister Modi took forward his “Act East” policy, which promises to give a fresh push to the ties with the region which plays a crucial role in the world economy. In a joint statement issued in Seoul, Korea was described as an indispensable partner. The two countries also recognised the value of the bilateral partnership and its contribution to bringing peace, stability and security in the Asia Pacific Region.