India wants South Korea to eliminate tariffs on a number of items, such as varieties of meat, milk, fruits, fish, stones, yarn and petroleum products, which were exempted or protected against steep cuts in the India-Korea Comprehensive Economic Partnership Agreement (CEPA) signed about a decade and a half ago, sources said.
The two countries are preparing to discuss request lists for tariff cuts later this month in the on-going negotiations to upgrade the CEPA, with narrowing of trade deficit with South Korea high on India’s agenda.
“Stakeholders in the Indian industry have been provided the draft request list and asked to suggest more items on which tariff cuts can be sought and even propose deletions if needed,” a source tracking the matter told businessline. The next round of India-Korea CEPA upgrade meeting is likely on July 17-19, sources said.
The India-South Korea CEPA, signed in August 2009 and implemented in January 2010, covers trade in goods, investments, services, and bilateral cooperation in areas of common interest. While India offered tariff elimination or concession on 83.8 per cent tariff lines imported from South Korea, the latter offered tariff elimination or concession on 93.2 per cent tariff lines.
“The Department of Commerce, which leads the negotiations, has also requested the industry to share the SPS and TBT (standards and technical barriers) related issues being faced while exporting to South Korea,” the source said.
Trade deficit
Bringing down the trade deficit with South Korea is one of the top matters for discussions featuring in India’s negotiating agenda. In 2023-24, India’s imports from South Korea was at $21.13 billion while its exports totalled a mere $6.41 billion.
The average exports from India to South Korea before the CEPA (2007-09) were valued at $3.4 billion, while the average imports stood at $7.3 billion, leading to an average trade deficit of $4 billion, per an analysis by research body Global Trade and Research Initiative (GTRI). Post-CEPA (2022-24), the average exports increased to $ 7.1 billion, and imports surged to $19.9 billion, resulting in a much larger average trade deficit of $12.8 billion, it said. “This indicates an increase in the trade deficit by $ 7.2 billion from the pre-CEPA period to the post-CEPA period, marking a 220 per cent increase,” the GTRI report pointed out.
Indian exporters face various non-tariff barriers in South Korea, including stringent standards, regulations, and certification requirements which make it difficult for Indian goods to penetrate the South Korean market, the report added.