FTA Enhancing Korea-India Trade
Trade between South Korea and India in the first two months of this year has nearly doubled year-on-year since the effectuation of a mutual free trade agreement (FTA), according to government data.
The bilateral trade volume amounted to $2.6 billion in the January-to-February period, up 96.1 percent from a year ago, the Korea Customs Service said Tuesday.
Korea exported $1.6 billion to India and imported $993 million from the South Asian country, with exports and imports rising 66 percent and 176.1 percent, respectively.
Except for last year, when the global economic downturn prevailed, the two-way trade between the two countries has steadily improved over the last couple of decades. The overall amount grew from $952 million to $15.6 billion between 1991 and 2008, before dropping 21.9 percent to $12.2 billion in 2009.
With signs of an economic turnaround, a free trade pact between the two countries contributed to boosting the mutual trade, industry watchers say.
South Korea and India signed the Comprehensive Economic Partnership Agreement (CEPA) in August last year, which came into effect January 1.
Various goods are traded without tariffs under the agreement. The exemption currently covers 38.4 percent of exports and 63 percent of imports for Korea.
The CEPA is expected to pave the way for boosting South Korea's trade ties with the world's fourth-largest economy to a different dimension.
The state-run Korea Institute for International Economic Policy forecast last year that their trade account will rise by $3.3 billion as a result of the pact, raising South Korea's gross domestic product (GDP) by some $800 million.
With the lowered tariff barrier from the agreement, small Korean exporters will have a sharper edge in overall price competitiveness.
Auto component manufacturers, for example, are likely to have better opportunities to explore the Indian market which reached $1.3 billion last year with their duty perks. Several other businesses such as audio-visual content, energy, science and technology, information and communication technology look to benefit from the CEPA.
India is the sixth country or economic bloc that has signed a trade agreement with South Korea, following Chile, Singapore, the European Free Trade Association (EFTA) and the Association of Southeast Asian Nations (ASEAN).
South Korea, which is currently in FTA negotiations with 11 countries, plans to finalize the deals this year with Peru and the Gulf Cooperation Council (GCC), a regional organization of Middle East countries.
It also aims to sign the FTA deal with the European Union, which was tentatively signed last October, as soon as possible. A free-trade accord with the United States, signed in 2007, is still on hold with legislative ratification dragging in both countries.