Korea, India to Double Trade Volume by 2014

Korea and India yesterday agreed to double bilateral trade volume to 30 billion U.S. dollars by 2014 based on their comprehensive economic partnership agreement that took effect Jan. 1.

Both countries will also upgrade their relations from a long-term cooperative partnership to a strategic partnership.

Korean President Lee Myung-bak and Indian Prime Minister Manmohan Singh issued a joint statement at Singh’s office in New Delhi yesterday after holding summit talks.

The agreement to raise ties to the level of a strategic partnership reflects the two leaders’ intent to strengthen cooperation in sectors including the economy, politics, diplomacy and national security. Establishing diplomatic relations in 1973, the two nations forged a long-term cooperative partnership in October 2004 when Korean President Roh Moo-hyun visited India.

Under a strategic partnership, Seoul and New Delhi are expected to strengthen defense as well. In this context, Lee and Singh agreed to hold their first joint committee meeting on defense and logistics cooperation in the first half of this year.

Bilateral talks on diplomacy and security by vice foreign ministers will seek to strengthen political and security cooperation.

In the summit talks, President Lee asked Singh to help Korea’s KT-1 to be selected in the Indian project to replace jet trainers worth five billion dollars. New Delhi will order new trainers in the first half of next year.

On bilateral trade, both sides agreed to double trade volume to 30 billion dollars within five years. With the world’s second-largest population with 1.2 billion and ranking fourth in purchasing power, the Indian market is seen as a new growth engine for Korea.

Bilateral trade volume reached 15.6 billion dollars in 2008 but slightly declined to 12.1 billion dollars last year.

The two leaders also discussed nuclear energy. India operates 17 nuclear reactors, is building six more, and plans the construction of another 20 with a capacity of 63,000 megawatts each.

A presidential official in Seoul said, “If the two nations sign an agreement, Korean companies can enter the Indian (nuclear reactor) market faster.”

In a luncheon with President Lee and businessmen, Korea Electric Power Corp. President Kim Ssang-soo said, “If an agreement is signed by the Korean and Indian governments, companies of the two nations will cooperate within two or three months.”

Seoul also asked New Delhi to help Korean steelmaker POSCO begin building a steel plant in the Indian state of Orrisa for India’s state-run Oil and Natural Gas Corp. Ltd. as soon as possible. With a planned investment of 12 billion dollars, it will be the most expensive overseas project by a Korean company.

Shortly after their summit, the two leaders also signed a memorandum of understanding on the peaceful use of information and scientific technology and outer space.

yongari@donga.com