Yoon-Modi Summit... A Foothold for Trade, Defense, and Space Cooperation with India, the "World's Factory"

Yoon Holds Korea-India Summit at G20 Meeting
Agrees to Sign EDCF Basic Agreement with $4 Billion Limit
Cooperation to Expand Participation in High-Value Infrastructure
Plans to Discuss CEPA Improvement, Defense, and ICT
Explores Cooperation Between Korea Aerospace Agency and Indian Space Agency
Expands Economic Influence to South Asia and Middle East

South Korea and India have agreed to sign a basic agreement for the External Economic Cooperation Fund (EDCF) with a limit of $4 billion (approximately 5.35 trillion KRW) between 2023 and 2026. They also decided to improve the Korea-India Comprehensive Economic Partnership Agreement (CEPA) to expand trade and simultaneously strengthen cooperation in advanced manufacturing, defense, and space sectors. Considering factors such as economic growth rate, population, workforce structure, and technological capabilities, India's economic development and cooperation potential are high, and it is expected that South Korea will be able to extend its economic influence to nearby regions such as South Asia and the Middle East in the future.

On the 10th, President Yoon Suk-yeol held a summit with Indian Prime Minister Narendra Modi during his visit to New Delhi, India, to attend the G20 summit, and agreed to strengthen cooperation on the occasion of the 50th anniversary of diplomatic relations between Korea and India. Amid the economic downturn in China due to factors such as the US-China hegemonic rivalry, India is emerging as the 'post-China,' and the South Korean government is interpreted as aiming to establish a more strengthened cooperation system. India, with a population of 1.4 billion this year, has surpassed China to become the world's most populous country. According to the IMF and others, India is expected to grow at an average rate of 6.1% until 2028 and is projected to become the world's third-largest economy by 2030, following the US and China. Furthermore, due to relatively low labor costs compared to China and Vietnam despite a high level of education, major companies are relocating their production bases to India, making it the 'factory of the world.'

[Image source=Yonhap News]

The two leaders agreed to cooperate to expand the participation of Korean companies in high value-added infrastructure projects in India through the signing of the basic agreement for the EDCF with a limit of $4 billion (2023?2026). The EDCF basic agreement is a loan-related agreement that specifies the support limits and conditions for the recipient country over a certain period (3?5 years). Through this, it is expected that Korea's participation in India's infrastructure development projects, which are growing at an annual rate of over 7%, including smart cities and digital and green projects, will expand. The two leaders also plan to establish and regularize cooperation channels at both government and private levels to actively promote Korea-India economic cooperation on the occasion of the 50th anniversary of diplomatic relations. At the government level, they plan to establish a Korea-India Industrial Cooperation Committee composed of ministerial-level officials and create a private cooperation network between economic organizations of both countries centered around the Federation of Korean Industries (FKI).

President Yoon also expressed the need for meaningful progress in the ongoing CEPA improvement negotiations, which have been underway for eight years since 2015. India is also pursuing the 'Atmanirbhar Bharat' (Self-Reliant India) policy, which has strengthened non-tariff import barriers, causing inconvenience to Korean companies. First, President Yoon agreed with Prime Minister Modi to alleviate the burden of certificate of origin, one of the biggest difficulties for export companies, by launching an 'electronic exchange system for certificates of origin' by the end of the year and agreed on mutual cross-dispatch of trade delegations.

President Yoon and Prime Minister Modi agreed to diversify cooperation into future industries such as digital and green industries, which are representative manufacturing sectors, creating a foothold for entry into emerging markets. India has close economic ties with South Asia, the Middle East, and Africa, and if localization investment strategies are deepened from research and development to production, marketing, and talent development, opportunities for entry into these countries will naturally open in the future.

It is also evaluated that future win-win cooperation was sought, including establishing a cooperative relationship between the Korea Aerospace Agency, led by South Korea, and India's space agency, as well as ICT cooperation. India, which established its space agency in 1972, has recently attracted attention as a leading country in the space industry by landing Chandrayaan-3 on the lunar south pole for the first time in the world and launching a solar observation satellite. Through this summit, the two leaders agreed to actively promote joint research and exchange of research personnel focusing on areas such as space exploration, satellite navigation systems, and utilization of satellite information through the Korea-India Research Innovation Center established in India.

Since Prime Minister Modi's inauguration, India has succeeded in the Digital India policy, forming a massive digital market, and President Yoon envisions maximizing the potential of Korea-India ICT cooperation to facilitate the entry of Korean companies. India has 1 billion smartphone users, and digital technology is used in everyday life such as banking, delivery, and shopping. Centered on about 110,000 startups, including mobile games, India has built the world's third-largest startup ecosystem following the US and China. Choi Sang-mok, Senior Secretary for Economic Affairs, explained at a local press briefing that "we will strengthen ICT cooperation between the two countries through future ICT policy councils and 5G forums, and actively support the entry of our startups into India, centered on the New Delhi Global Business Center opened last July and the Korea-India Software Win-Win Cooperation Center."

Meanwhile, the two leaders also shared views on the situation in the Korean Peninsula and the Indo-Pacific region as well as cooperation on the international stage. In this regard, the two leaders agreed to contribute together to regional peace, stability, and a rules-based order in harmony with the South Korean government's 'Indo-Pacific Strategy' and the Indian government's 'India’s vision for Indo-Pacific.' They also agreed that North Korea's provocations pose a threat not only to the Korean Peninsula but also to regional and international peace, and that firm responses from the international community are necessary.

This content was produced with the assistance of AI translation services.