India and South Korea to Begin Fresh Negotiations to Upgrade CEPA in May-June 2024

India and South Korea are set to commence fresh talks, likely, may to upgrade the Comprehensive Economic Partnership Agreement (CEPA) that was signed in 2009. India has been seeking greater market access for commodities such as rice, steel, and shrimp, as well as sectors like healthcare and IT, amidst a growing trade deficit with South Korea.

During 2023, India's exports to South Korea stood at $6.286 billion, marking a 16.61% annual decrease, while imports from South Korea were $21.361 billion, representing a 3.19% annual increase. The Indian government has raised concerns about the widening trade deficit, and the upcoming negotiations aim to address some of these issues.

Why this matters: The negotiations between India and South Korea to upgrade CEPA have significant implications for bilateral trade relations and economic cooperation. Addressing the growing trade deficit and securing greater market access for Indian goods and services in South Korea could help boost India's exports and strengthen its economic ties with a key Asian partner.

India's trade balance with other major Asian partners, including ASEAN, Japan, and South Korea, is also in deficit, with imports exceeding exports. An analysis of India's free trade agreements with these partners reveals that India's merchandise trade deficit has increased significantly, and its exports have grown at a lower rate compared to imports.

The upcoming negotiations between India and South Korea present an opportunity to address the trade imbalance and explore ways to enhance market access for Indian products and services. The Indian government aims to secure favorable terms and concessions in key sectors such as agriculture, manufacturing, healthcare, and IT, which could help boost India's exports to South Korea and reduce the trade deficit.

As India seeks to strengthen its economic ties with South Korea and other Asian partners, the successful negotiation and implementation of an upgraded CEPA could serve as a model for future trade agreements and economic cooperation initiatives. The outcome of these negotiations will be closely watched by businesses, policymakers, and trade experts, as it could have far-reaching implications for India's trade relations and economic growth prospects in the region.

Key Takeaways

• India and South Korea to commence talks to upgrade 2009 CEPA agreement.
• India seeks greater market access for commodities and sectors like healthcare, IT.
• India's trade deficit with South Korea grew, exports decreased 16.61% in 2023.
• Negotiations aim to address trade imbalance and enhance market access for Indian goods.
• Successful CEPA upgrade could serve as a model for India's future trade agreements.