INDIA-KOREA - Asia-Pacific Business and Technology Report

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DIPLOMACY INDIA-KOREA Glorious Past Bright Future Growing Institutionalization of India-Korea Ties by Lakhvinder Singh Indian-Korean diplomatic relations have come a long way since they were first set up around 50 years ago. After more than 2000 years of religious and cultural ties, both countries decided to set up diplomatic liaison offices in each other’s capitals in 1962. During the full tide of cold war rivalry, the two nations found themselves in opposing campuses. However, despite the growing rivalry between superpowers, India and South Korea continued to grow their diplomatic ties together, and upgraded their diplomatic ties to the full ambassadorial level in 1973. Since then they have never looked back. Today India and Korea are enjoying excellent relations in all spheres. Bilateral ties are growing like never before. Trade ties are growing at 30 percent or more per year. A new trade target of US$40 billion in 2015 is said to be easily achievable. Korean investment in India stands at more than US$2.3 billion. Indian companies have also invested more than US$1 billion in Korea. Giving real push to this relationship is the web of agreements and MoUs which have been signed between these countries in recent years which are providing a sound institutional base. Because this institutional structure has now acquired a life of its own, independent of policy and perspectives of the government of the day, bilateral growth is expected to continue long into the future. Today the Indo-Korean economic relationship is regulated by the Comprehensive Economic Partnership Agreement (CEPA) signed in 2010. This economic agreement has proved to be a boon as mutual trade has been growing more than 30 percent per year since its initial signing. Encouraged by this success, both countries have now set up a joint committee to upgrade the CEPA to take things to a higher level. The second meeting of this committee is planned to be held in Seoul this year. A joint commission co-chaired by the Foreign Minister and External Affairs Minister of the two countries is now regulating diplomatic relations. Meeting every year alternately in Seoul and New Delhi, the commission is constantly reviewing these growing relations and giving new direction to the fast-developing strategic partnership. The seventh meeting of this commission is scheduled to be held soon in New Delhi. Foreign Policy & Security Dialogue (FPSD), being held at the level of Vice Foreign Minister, MOFAT and Secretary (East), MEA, is also emerging as a useful instrument for exchanging views and harmonizing positions on a variety of bilateral, regional and international issues. Defense cooperation and defense exchanges are also on the rise. Guiding this cooperation with a strong footing are two MoUs of defense ties signed in 2010. The first of these two regulates and promotes defense-related experience and information, mutual exchange and visits by military personnel and experts, including civilian staff associated with defense services, military education and training and conduct of military exercises, exchange visits of ships and aircraft, as jointly decided between the two countries. The second MoU, signed between Controller of Research and Development of DRDO and Defense Acquisition and Procurement Agency (DAPA), aims at identifying futuristic defense technology areas of mutual interest and pursuing research and development projects in both countries. Strategically, India and Korea are also much closer than ever before. Guiding this cooperation is the India-Korea strategic partnership agreement signed during Korean President Lee’s recent visit to New Delhi. Given the common challenges that both countries are facing in ensuring security against non-conventional threats, both understand the importance of cooperating and consulting with each other in developing a regional architecture in the broader Asia-Pacific region. The fast-changing balance of power and new role of emerging regional powers is being constantly reviewed under this agreement. In recent years cooperation in the area of science and technology was emerging as a priority between India and Korea. To cement this cooperation both countries had set up an institutional infrastructure. In this regard, the Joint Committee on Science and Technology has been upgraded to the ministerial level. Additionally, a US$10 million joint R&D fund has been set up for research projects, human resource exchange, workshops and other science and technology cooperation programs, which is giving new impetus to cooperation in these fields. An MoU on cooperation between the Indian Space Research Organization (ISRO) and the Korea Aerospace Research Institute has further strengthened the base for joint work in the area of space research. This has already opened a big window of business opportunity for two both nations in this sector. India is actively participating in the RoK’s international open bidding for the launching of Korean satellites, for example. Recently, energy has been emerging as another area of mutual interest between the two countries. A bilateral civil nuclear cooperation agreement signed during Indian president Partiba Patil’s visit to Korea last year is providing the legal framework to this cooperation. Agreement has opened wide opportunities for Korean companies to invest in the Indian nuclear energy sector. The Korean side is said to be actively asking for a site to set up the first Korean nuclear reactors in India. On the front of cultural relations, great strides have also been made in the recent past. Successful execution of cultural festivals in 2011 have brought together the two 16 www.biztechreport.com © pib.nic.in The Defence Minister, Shri A. K. Antony and his South Korean counterpart Kim Tae-young exchanging pleasantries at their talks, in Seoul on September 03, 2010 cultures like never before. To take these ties further, cultural centers are being set up in both countries (an India cultural center in Seoul has already been set up in 2011 and a Korea cultural center in India is planned for 2012). Growing educational and academic exchange between the two countries is also playing an important role in bringing students and scholars together. An agreement has also been signed to promote parliamentary and media exchanges. Korea is also said to be playing active role in the establishment of Nalanda University in India to reestablish India’s traditional connect with East Asia. An MoU on cooperation between the Korea National diplomatic Academy and its Foreign Service Institute is certain to bring the diplomatic community of these two countries closer than ever. Agreement on the simplification of visa procedures is expected to promote more people-to-people exchanges in the near future. Both countries have also agreed to cooperate on global economic and financial issues (within the G-20 process). They are also consulting each other on UN reforms, including security council expansion. Global hot spots such as the Gulf, West Asia and North Africa are also getting due attention from both partners. Recognizing that any disruption of peace on Korean peninsula will have worldwide economic and strategic ramifications, India is actively advocating a peaceful resolution of the North Korean nuclear and missile program. In order to keep sea lanes of communication open and safe from piracy and terrorism, India is advocating closer cooperation with the Korean navy. Both countries have also agreed to cooperate within the UN framework in adopting the Comprehensive Convention on International Terrorism, and also within the East Asia summit to make sure the process is not high-jacked by one country or a group of countries. Apart from these major agreements and MoUs, there exist dozens of other bilateral agreements promoting smooth functioning of cooperation between the two countries. Given all this, India-Korea ties have been put on very strong footing and thus are expected to continue expanding for many decades to come. A-P
Business New Thinking for Reducing the Risk of Investment in India by Bonghoon Kim Korean companies have been investing in India since the mid-1990s. Several big Korean companies have successfully established themselves there. However, most small and mediumsized companies could not reach the Indian market. © pib.nic.in The Union Minister for Micro, Small and Medium Enterprises, Shri Virbhadra Singh addressing the “7th North-East Business Summit”, in New Delhi on January 06, 2012. In this article we will discuss the prospectus of small and medium-sized companies investing in India. First of all, Korean companies need to analyze more regions in India before investing there. Since the Indian economy opened in 1991, each state has been individually promoting economic development, setting industrial policies, and also employing different tax systems. As such, economic disparity has occurred among the states for the past ten years, resulting in a gap in terms of investment risk. Traditionally, the areas with low investment risk are the major four cities of India, along with areas that have favorable road, railroad and harbor facilities. Agriculture-centered areas and states under the communist party have had low investment attractiveness. There is generally much information on the investment environment in India, but it is still difficult for Korean companies to obtain a broader sense of the regional and local investment environment, something which is certainly important for any Korean company to understand before committing to major investment funding there. For example, Gujarat is one of the best states in India in terms of economic environment but relatively few Korean companies have invested there. Punjab is one of the richest states in India so there is huge consumer consumption power. However, again, there are few Korean companies there. This indicates that Korean companies might be being influenced by factors other than pure business logic. For example, when planning for the investment environment of Gujarat, the following map and information of infrastructure should be initial step to understand it: Roads: Establishment of road network between Delhi and Mumbai (total 137,384 km, paved road 98.9%). Railroad: 37.9% in area of Gujarat state Airport: 10 airports in Gujarat Ports: 41, along the 1,600 km coastline, which has good accessibility Gas: Unique integrated gas network in India (total 2,200) Waterway network : Total 75,000 km Water resource: 17 reservoirs and the Narmada Canal (10,619 sq. km); favorable water supply with 1,864 mm of annual rainfall (Madhban dam) Electricity: favorable electricity infrasystem and transmission and distribution lines. High quality electricity (Source: MAXtin India Advisory) Second, Korean companies need to analyze more social and political risk instead just of calculating cash flow into India. India has a unique political system where it practices an advanced democracy system unlike other developing country, where dictatorship or military regimes prevail. The risk from the ‘quality of bureaucracy’ is estimated to be low, which is attributed to the high level education of India and its abundance of university graduates who are not only well-versed in English but also have excellent administrative performance abilities. However, the risk from corruption is quite high. Bribery is often used as a measure for companies to negotiate with the state for agreements and tax. This is due to the fact that an electronic system to handle documents is not yet well-established, and most paperwork is done by hand. Corruption is also influenced by the financial pressures coming from large family structures, where the family head has to take care and feed the many extended family members. Third, Korean companies need to understand more functions of the SEZ and industrial zones in India because it is very hard for them to construct their plant outside of these areas. For example, when we check 17 www.biztechreport.com functions of SEZ in India, we should check the following: • industrial function for high-tech and manufacturing • education & research functions of the KTR Hub • Convention and International business function • Commercial & business function • rest & leisure functions harmonizing with the ocean • eco-friendly residential function • religion, medical tourism function India accounts for a great portion of the world economy and is expected to continue to grow over the next several decades, with a generally low investment risk. Even from a social point of view, owing to the religious power from all classes of population, a mutually harmonious atmosphere is present and the risk level is considered very low. From an economic point of view, India is facing difficulty in establishing infrastructure, caused by the worsening deficit of the government, as well as difficulty in accelerating the engine of industrial growth due to imbalance in industrial structure. Though these may cause slower growth, the risk accompanying the stabilization of economy growth is very low and the economy risk is not considered high owing to the high stabilization of the currency exchange rate. Regionally, the southern and western parts of the country are considered low in investment risk, while investment in the north-eastern part of the region is considered unattractive. However, Korean companies need to compare more specific investment environments in differing regions. Today there more Korean companies that are planning to invest in Indian market in spite of some risks. It will not be long before small and medium enterprises will have overwhelmingly positive views of investing in Indian growth. A-P
Page 1: India-Korea Relations: Present & Fu
Page 8 and 9: cover story INDIA-KOREA Glorious Pa
Page 10 and 11: cover story INDIA-KOREA Glorious Pa
Page 12 and 13: Q a & lution would be unacceptable.
Page 14 and 15: Q and are difficult to a & follow e
Page 18 and 19: Business Understanding Future of th
Page 20 and 21: Business Ssangyong Motors Advances
Page 22 and 23: Business Why is Indian Investment i
Page 24 and 25: Business Evaluation of the Economic
Page 26 and 27: Q a & Yeo-Song ParkDirector of the
Page 28 and 29: Defense & STRATEGY Taking a Closer
Page 30 and 31: Defense & STRATEGY © pib.nic.in Th
Page 32 and 33: Defense & STRATEGY Military and Str
Page 34 and 35: health Why Korea and India Should M
Page 36 and 37: health Potential of Health and Medi
Page 38 and 39: Science & Technology Professor Siva
Page 40 and 41: Science & Technology India-Korea Sc
Page 42 and 43: ENERGY Potential of India-South Kor
Page 44 and 45: ENERGY by Anshu Shrivastava As one
Page 46 and 47: EDUCATION Human Resources Developme
Page 48: Guards of emperor palace at Seoul.

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