"Korean FDI can boom if hurdles are removed"

The Republic of Korea and India have ancient historical and cultural ties. In a short span of time Korean electronic products like Samsung and LG have become household names in India. The Korean auto giant Hyundai Motors have conquered the roads of India. The first country to have optic fibre broadband in primary and secondary schools nationwide, Korea is pulsating in India. The Ambassador of the Republic of Korea, Mr. Kim Joong Keun in an exclusive interview to THE BLUE MOON Editor, Amit Mittal spoke about the tremendous scope of trade and investments in India.

How do you view the current relations between India and Korea?

"The two countries established Ambassador level contacts in 1973; before this it were only consular relations. When in 1990s the Indian government launched its new policy of reforms, Korean companies started coming to India one by one starting with LG, Hyundai and Samsung. The relations, however, just developed in bilateral trade. It was when our President Lee Myung Bak was invited as the chief guest on the occasion of the Republic Day of India in 2010 that we upgraded our relations to Strategic Partnership. This could be a diplomatic rhetoric, however, in case of Korea it is different; our relationship entered into a real partnership. Until 2009 the number of Indian government officials traveling to Korea was less than 20, but after 2010 the number multiplied ten times. In 2010 Indian Foreign Minister, S. M. Krishna, Defence Minister, A. K. Antony and Vyalar Ravi traveled to Korea. From Korean side the Finance Minister, Trade Minister, Justice Minister and Speaker of the National Assembly visited India. These visits indicate enhanced relations between the two countries.

Another important development was the coming into effect of the Comprehensive Economic Partnership Agreement (CEPA) in January 2010. January 2010 has been very important for bilateral relations between the two countries; while our President visited India on one hand, CEPA was signed on the other."

Are you satisfied with the volume of bilateral trade between the two countries?

"According to statistics the bilateral trade between the two countries was USD 17.1 billion in 2010. It is merely 2.6 % of the total trade volume of Korea. This shows that we have a large potential to develop much more. Similarly Korean investment in India is less than USD 3 billion which constitutes 1.3 % of total Korean investments. We have the largest ever investment of USD 12 billion planned. It is the biggest ever FDI in the Pohang Iron and Steel Company (POSCO) project. Our relations started strengthening since 1990 before that the two countries were pursuing different policies; India was pursuing socialist policies while we have been propagating open market. After India turned to open market policy, Koreans were the first to come in."

The process of Korean investment appears slow, do you think the investing companies are facing red tape hurdles in India?

"Yes ! What you mentioned as red tape is delaying projects in many ways. An example is the POSCO agreement signed with Orissa in 2006. Five years later we have not made any headway. You just wasted five years. POSCO is a symbolic case to represent or describe the posture of Indian government towards Foreign Direct Investments (FDI). There are problems like Hyundai facing labour union problems. These are hardliner labour unions. The problem was solved, but some radical elements were arrested and later released. The labour union wants to hire these radical elements again. There is no problem as of now. Hyundai Motors have an annual capacity to produce 600,000 units, but they have just done half of it. Hyundai ownership believes it is time for them to hold breath."

Is Hyundai shipping planning to invest in India?

"Hyundai Heavy Industries (shipping) is a separate company. There is big scope for investments in the shipping industry. However, infrastructure and ports need to be developed. Korea’s ship building industry is the best in the world. Korea held the first position earlier in terms of volumes; in 2009 its position slipped to second, but in 2010 it has regained its position. Korea has maintained value-added ship building. If the Indian government or the industry requests us to bring in our ship building industry, we are ready to conduct a survey and work. We hope to invest in ship building if there is a concrete proposal with a blue print."

Is Korea in a position to supply fighter aircraft?

"Korea produces best jet trainer-cum- fighter aircraft, but we do not make passenger planes."

Is there any cooperation in the filed of defence?

"India’s Defence Minister, A. K. Antony visited Korea and signed two MoUs -- to establish defence cooperation and consultation and trade of military equipment. Our relations in the field of security have just started; we have a large room to cooperate."

Are there enough direct flights to match the growing movement between the two countries?

"For promoting travel between the two countries we have three flights each week by Korean Airlines from Mumbai, three per week by Asiana Airlines to Delhi and four by Air India via Hong Kong. We need to expand to Chennai and Bangalore and increase the number of flights. Both the governments have agreed to revise civil aviation. In a couple of months the first round of negotiations is set to start. We are also willing to accommodate private airlines if they approach us. The passenger traffic is on the increase. In 2010 there were 90,000 Koreans visiting India and 50,000 Indians going to Korea which is a 30% increase over the numbers in 2007. In 2008-2009 the figures went down due to financial crisis, but now the numbers are picking up."

In terms of electronic products what position does Korea hold?

"Korea is the most widely electronically connected country in the world. Korea will be the only country in the world to switch completely to HD television from 1 January, 2012."

Does Korea support permanent membership for India in UNSC?

"On permanent membership of the UNSC, India is qualified for being a permanent member. Such a decision is based on consensus of the members."

Are you promoting the cultural relations too?

"Both our leaders designated 2011 as year of Korea in India and India in Korea. We launched the Korea Festival in India in March 2011. In July India will open a culture centre in Seoul. The Head of Indian Council for Cultural Relations (ICCR), Dr. Karan Singh will open this centre. By the end of this year a Korean Cultural centre will open in India."
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