Modi's two-day South Korea visit: Of Ayodhya, peace and investments

Few nations other than South Korea have helped Modi shape a domestic narrative alongside deepening bilateral ties.

Business Standard : As Prime Minister (PM) Narendra Modi starts his two-day visit to South Korea for a second bilateral summit in less than a year, there is a lot on his and India’s agenda. Tomorrow, Modi will be conferred the prestigious Seoul Peace Prize 2018 for his contribution to global growth, human development and international cooperation. Modi joins the league of world leaders like Angela Merkel, Kofi Annan, Ban Ki Moon and Vaclav Havel as recipients of the prize, started in 1990.

Much of the action on the negotiations front will take place tomorrow, when Modi takes forward the agenda set during South Korean President Moon Jae-In’s state visit to India in July 2018. India and South Korea had inked 11 memoranda of understandings (MoUs) during President Moon’s last visit – nine of which related to deepening trade relations, cooperation in the fields of technology, science, telecommunications, infrastructure and boosting investments.

The opening of the world’s largest mobile phone manufacturing factory in Noida by South Korea’s largest chaebol Samsung last year enhanced that nation’s profile in India, but there is still a long way to go in order to boost trade and investment between New Delhi and Seoul.

Trade between the two nations stood at around $21 billion in 2017-18, comprising 2.7 per cent of India’s global trade. While India’s exports to South Korea stood at $4.5 billion, its imports were a little over $16 billion. India’s imports from South Korea have increased 21 per cent since the Modi government came to power in 2014-15, while its exports have declined three per cent.

More than half of all Indian exports to South Korea comprised mineral fuels, aluminium, iron, steel and organic chemicals. India’s largest import from South Korea was electronics worth $2.7 billion in 2017-18. Other significant imports include manufacturing equipment, plastics, iron, steel and semi-precious stones. Trade with India also comprises a small portion of South Korea’s global annual trade, estimated by the Wold Trade Organization (WTO) at over $1 trillion.

South Korea, the world’s 11th-largest economy with a gross domestic product (GDP) of $1.6 trillion, is also a small contributor to foreign direct investment (FDI) into India. During the period from April 2000 to December 2018, South Korea has accounted for less than one per cent of all FDI equity flows into India. In 2017-18, FDI from South Korea stood at $293 million – having doubled since the Modi government came to power in 2014-15.