India and South Korea are set to embark on a new chapter in their bilateral economic relations following the signing of a Free Trade Agreement (FTA) between them. The agreement was signed on 7th July 2021 and is expected to boost trade and investment between the two countries.
The India-South Korea FTA is a comprehensive agreement covering goods, services, and investment. It aims to eliminate tariffs on a majority of products and establish a framework for the liberalization of services and investment. The agreement also includes provisions for the protection of intellectual property rights, e-commerce, and other trade-related issues.
The FTA is significant for both countries as it will provide them with greater market access and opportunities to expand their trade and investment. India is the world`s fifth-largest economy, and South Korea is the third-largest in Asia. The two countries have complementary economies, and the FTA is expected to lead to increased exports and investments in sectors such as automobiles, electronics, chemicals, and textiles.
Under the agreement, South Korea will eliminate tariffs on 17% of tariff lines for Indian exports immediately, while India will eliminate tariffs on 11% of tariff lines for Korean exports. The two countries will then gradually reduce tariffs on other goods over a period of time.
One of the significant advantages of the FTA is the reduction in transaction costs for both Indian and South Korean businesses. The agreement will simplify customs procedures, reduce compliance costs, and provide greater ease of doing business to companies from both countries. This is expected to lead to increased trade and investment flows, especially for small and medium-sized enterprises.
The FTA also includes provisions for the liberalization of services and investment. It will provide greater access to each other`s markets for professional and business services such as accounting, legal, and consulting services. The agreement also includes provisions that will protect the interests of investors from both countries and provide them with greater certainty and predictability.
The India-South Korea FTA is a significant development in the economic relations between the two countries. It is expected to provide a boost to trade and investment and lead to greater economic integration between India and South Korea. The FTA is part of India`s efforts to strengthen its economic ties with countries in the Asia-Pacific region and will provide a stepping stone for further economic cooperation between the two countries.