Modi's visit to Japan
By Rajiv Kumar
Newly elected Indian Prime Minister Narendra Modi wrapped up his visit to Japan on Wednesday. It marked a watershed in India-Japan relations.
“Japan is the highest priority for my government,” Modi said after Monday’s summit, indicating his desire to forge closer ties with Tokyo. What does this mean for Korea, which sees India as a crucial economic partner that will help this country reduce its economic dependence on China?
Economic relations between Korea and India were remarkable until recently ― total trade between the two countries surpassed that conducted between India and Japan. Equally significant, Seoul also became central to New Delhi’s “Look East” policy: Consider that India concluded one of the earliest trade pacts with Korea, called the India-Korea Comprehensive Economic Partnership Agreement (CEPA), in 2009, three years before the India-Japan CEPA.
Now it seems that things are changing. Despite the trade pact, Korea’s trade with India has decreased recently. Total bilateral trade, according to Korea International Trade Association data, accounted for $17.5 billion in 2013 ― a decline of $3 billion compared with 2011.
In contrast, Japan’s total trade with India has increased from $13.7 billion in 2011 to $18.5 billion in 2013. During this Summit, Abe managed to get Japan better access to the Indian market, which may further influence Korea’s economic interests in India.
For instance, in return for Japan’s commitment to doubling its investment in India in the next five years, as well as the number of Japanese companies operating there, Modi has promised to create a special mechanism for Japanese investors in India, called the “Japan Fast Track Channel.”
This move would give Japanese companies the upper hand over Korean companies in the Indian market. Furthermore, Korea will face tough competition from Japan in the near future if it is to export its nuclear technology to India, because India has pushed for a civilian nuclear agreement with Japan in line with the 2011 deal between India and Korea.
This would give Japanese tech giants such as Toshiba and Hitachi access to India. Seoul, which signed a defense contract with New Delhi to supply weapons to the latter, will now have to compete with Tokyo in other sectors as well, because Japan signed its first-ever defense cooperation agreement with India during Modi’s visit, enabling Japan to export its weapons and other defense equipment to India.
This may sound like a tough time ahead for Indian-Korean economic ties. What, therefore, needs to be done? The Park government, which seems to focus too much on Northeast Asian issues and to ignore what’s going on elsewhere, needs to rethink its strategy for India.
While Asian leaders were rushing to build a close relationship with Modi as soon as he took office this May, President Park found no time to reach out to him. It was not until late July that she congratulated Modi over the telephone. Seoul must understand that politics and economics always go hand in hand. Therefore, it needs to develop close relations with New Delhi, if it wants to give Korean businesses access to the Indian market.
On the other hand, New Delhi should also ensure that closer relations with Tokyo do not come at the expense of relations with Seoul, since Korea has been one of the earliest and largest investors in the Indian market. Korea also has the potential to equal Japan some day in becoming part of Modi’s “make in India” initiative.
The writer is convener of the India-Korea Research Association and an East Asian Studies research scholar at Sungkyunkwan University in Seoul. He’s at mailrajivsingh@gmail.com.