Business IdeasS Korean firms to win greater access to India
Hyundai Motor Co, LG Electronics Inc and other South Korean companies will get greater access to India’s 1.2 billion people in a trade deal to be signed tomorrow.
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Import duties on 85 per cent of Korean goods, including auto parts and electronics, will be cut or phased out over the next decade, Korea’s trade ministry said today. Commerce Minister Anand Sharma and his South Korean counterpart Kim Jong Hoon will sign the agreement in Seoul, said Choi Kyong Lim, the official overseeing trade agreements, said today in Seoul.
India’s $1.2-trillion economy grew 5.8 per cent in the January-March quarter, brushing off the slowdown that has dragged Korea into recession. Singapore’s exports to India excluding oil products more than doubled in the two years after they signed a similar accord in 2005, according to Indian commerce ministry data.
“South Korea is looking to expand its presence in India with its vibrant economy and 1.2 billion population,” said Myong Jin Ho, a researcher at the Institute for International Trade in Seoul.
Bilateral trade between India and South Korea rose 39 per cent last year to $15.6 billion. South Korea exported $3.6 billion worth of goods to India, and imported $1.6 billion in the first six months of this year.
India’s growth puts more money into the hands of consumers in a country where almost 30 per cent of the population is under 15 years of age. Younger people tend to spend more on vehicles, phones and other consumer goods.
Car Demand
India will eliminate or reduce tariffs on 85 percent of South Korean exports over 10 years, Korea’s trade ministry said. These will include auto parts, tankers, electronic goods, machinery parts and synthetic rubber.
South Korea’s cuts will cover about 90 per cent of Indian exports, including polycarbonates, leather, industrial diamonds, gasoline and corn for livestock.
Hyundai, which operates an auto plant near Chennai, sold 244,030 vehicles in the country in the year ended March 31. The largest South Korean automaker gets 55 per cent of sales from emerging markets including India and China, where car demand has withstood the global slowdown.
LG Electronics, the world’s third-largest maker of LCD televisions, also has plants in India to make consumer appliances and personal computer monitors.