The Hindu Business Line : India-Korea economic pact to restore historic ties

Once the mutual recognition pacts are in place, professionals from both sides would be able to practise in the other country on the basis of degrees or diplomas secured in their home countries

G. Srinivasan

New Delhi, Sept. 28 The sewing up of the finer details by India and South Korea on Thursday in Seoul for a Comprehensive Economic Partnership Agreement (CEPA) to be launched by the first half of next year covering trade, goods and investment would help balance the historic ties both the countries held in the past.

Talking to Business Line here after his return from Seoul leading the Indian official level delegation, the Commerce Secretary, Mr Gopal K Pillai, said that the Korean Deputy Minister, Mr My Hye-min Lee, said that this is the second most important achievement in India-Korea relations.

The first one related to two centuries ago when an Indian princess of Ayodhya married an emperor in Korea, Mr Lee told the meeting, Mr Pillai remarked.

Posco major investor

Mr Pillai said that India’s exports to South Kora have been cranking up at 40 per cent a year, while their exports to India were at 30 per cent, leaving the surplus balance of trade in India’s favour. Investment-wise, South Korea’s Posco has emerged as a major investor in India.

Stating that the highest official level meeting is over between the two countries, he said that some clearing up of the formal text is left so that the final text of the agreement would be made public by October 31 by both the sides.

To a specific query as to the response of domestic industry for liberalisation of trade in goods and services particularly when the manufacturing might of South Korea as a member of the rich country club OECD (Organisation for Economic Cooperation and Development) is acknowledged, Mr Pillai said that New Delhi consulted with representatives of all the stakeholders and the official team had members from FICCI, CII and ATMA.

He said sensitivities on both sides were duly factored in and scheduled of tariff liberalisation has been tailored accordingly.

Services sector

Referring to services liberalisation under CEPA, Mr Pillai said that mutual recognition agreement (MRA) of each country’s professionals, particularly in areas such as medicine and health service would be ‘a slow process’ as India has hundreds/thousands of professional institutes whereas the developed countries would not have so many.

He said in the case of Singapore, they have said that under the CEPA “we recognise 11 medical colleges in India”. Though the process would take some time, he said, once MRAs are put in place, the professionals from both sides would be able to practise in the other country on the basis of degrees or diplomas secured in their home countries.

Mr Pillai said that next week, the talks on CEPA with Japan enters a crucial phase under which 85 per cent of India’s tariff lines would be brought to zero, while Japan would bring 90 per cent of its tariff lines under zero in a phased manner. As for the present, India has on the bag the FTA with Asean and that of CEPA with South Korea this year, he added.

Export performance

Asked about the export performance, Mr Pillai said that as the trade data for August 2008 are due in a couple of days, he is optimistic that the export growth rate for that month would be 30 plus in dollar terms and in rupee terms above 35 per cent. He said that when the country’s export target of $200 billion was set for this fiscal, the growth rate postulated was 25 per cent.

But with 30 per cent plus growth in recent months, the country’s export during the first half of 2008-09 (April to September) on a pro rata basis would easily exceed $100 billion, given the depreciating Indian rupee vis-À-vis the US dollar.

He said that while interest subvention on export credit would end on September 30, 2008 as announced by the RBI, the Commerce Department is taking up with the Finance Ministry the continuous high transaction cost and procedural hurdles in the form of “too much nitpicking” so that the hassles on exporters would be minimised.

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