Introduction
The Republic of Korea (ROK) may be called one of the great success stories of our times. Beginning as a war-torn former colony, the ROK systematically built itself up from the 1950s to become the major industrial power that it is today. It initially relied on foreign loans to build up select industries—whose owners were chosen by the government— that later evolved into its
chaebols (industrial conglomerates). Eventually, in the early 1980s, the country launched a major national research and development (R&D) programme focusing on private R&D and workers training.
<1> The 1997 Asian economic crisis encouraged the ROK to push its
chaebols to restructure and innovate.
<2>
The success of South Korea’s transformation is apparent from the fact that where, in the 1970s, the government financed 80 percent of the country’s R&D, today the private sector has a bigger role. At first, Indian leaders who visited the ROK viewed it primarily as an economic partner and focused on issues of trade and commerce.
<3> Over time, it became apparent that the ROK, which has emerged as a technology powerhouse, can be a vehicle for India to pursue its long cherished path of industrialisation. Further, with the linkage of the ROK’s New Southern Policy with India’s Act East Policy, the two countries can form the hinges of a larger Indo-Pacific policy in conjunction with other partners including the US, Japan, Taiwan, Vietnam, Australia, and the ASEAN countries.
India and the ROK: Early years of cooperation
The ROK was among the first countries to bet on India’s economic liberalisation in the early 1990s. Korean companies like Hyundai, Daewoo, and Samsung became strong investors in India. India’s Look East policy of the time fitted well with this development. According to the 1995-96 annual report of the Ministry of External Affairs, the then president of the ROK, Kim Young Sam came to India with a large delegation of foreign ministry and trade officials. The relationship has been kept up since. Following the visit of President Roh Moo-hyun in October 2004 and the return visit of President APJ Abdul Kalam in February 2006, the two sides began a process that concluded in the Comprehensive Economic Partnership Agreement (CEPA). They also entered into a memorandum of understanding (MoU) for cooperation in defence industry and logistics as well as one between India’s Department of Science and Technology and the Korea Industrial Technology Foundation.
<4> A hallmark of the growing ties between the two countries was President Lee Myung-bak’s visit as chief guest of the Republic Day celebrations on 26 January 2010, an occasion when the level of ties was raised to a “strategic partnership.” Once again, the agreements and MoUs signed between the two countries featured science and technology (S&T) as well as information technology.
<5>
The growing diplomatic relations have also been reflected in trade and commerce between the two countries. The ROK’s direct investment in India from 1991 to 30 September 1995 amounted to only US$ 46.5 million mainly in goods such as nylon yard, tyres, automobiles, TV tubes, electronics, garments, stone cutting, and glass.
<6> In contrast, Japanese foreign investment in the same period was worth US$ 211 million. Similarly, India’s two-way trade with South Korea was only around US$ 984.9 million at this time, as compared to the Indo-Japan trade of US$ 2.3 billion.
Trade figures improved over time. Bilateral trade crossed US$ 20.5 billion in 2011, registering a 70-percent growth in two years. While the two sides initially aimed to take their trade up to US$ 40 billion by 2015, trade declined for a few years. It has since recovered to US$ 21.5 billion in 2018. South Korea’s main exports to India are in auto parts, telecommunications equipment, hot rolled iron products, petroleum refined products, base lubricating oils, nuclear reactors, mechanical appliances, electrical machinery and parts, and iron and steel products. India exports iron, steel, cereals, and naphtha to South Korea.
Today, the ROK is also the 14th largest source of foreign direct investment in India. The ROK has invested nearly US$ 4 billion in the period from 2000 to June 2019 in metals, automobiles, electronics, machine tools, and medical equipment. The most significant South Korean investments are in the automobile and telecommunications sector; companies such as Samsung, Hyundai, and LG are well-known brands in India.
Hyundai came into the country in 1998 with its popular Santro car model. Today, Hyundai is the second largest car manufacturer in the country as well as a major exporter of automobiles. The company produces around 700,000 cars per annum in its Indian plants and exports more than 150,000. It has also set up a major R&D facility in Hyderabad and there are plans to expand its Sriperumbudur plant to facilitate exports.
Samsung, for its part, began operations in the country in 1995 and set up its first R&D centre in Bengaluru in 1996. It is another company that upholds the banner of ‘Make in India’ and is one of the largest electronics manufacturers in the country.
<7> Samsung has five R&D units, one design centre, and two manufacturing facilities in the country. In July 2018, it inaugurated the world’s largest mobile factory in Noida. LG, a leading consumer durables company, began operations in India in 1997, although it had set up its R&D centre a year earlier in 1996. This research centre, LG Soft India, is now the largest one outside Korea.
<8> LG also has two manufacturing facilities in the country, one in Noida and another in Pune. Around 10 percent of its sales from India are exported, with 95 percent of the components domestically sourced or produced.
Recently, Kia Motors has also set up a plant in India. Other South Korean companies active in the country are Posco, Lotte, Doosan, and Rotem. Meanwhile, India has invested approximately US$ 3 billion in Korea: Mahindra & Mahindra invested around US$ 360 million in SsangYong Motor in 2011; Tata Motors acquired Daewoo Commercial Vehicle Company for US$ 102 million in March 2004; and Novelis, a Hindalco subsidiary, acquired Alcan Taihan Aluminum in January 2005 with a stake worth US$ 700 million.
‘Special strategic partnership’ from 2015
Prime Minister Modi returned President Park Geun-hye’s January 2014 visit to India in May 2015 with a state visit to the ROK. It was during this 2015 visit that the two sides elevated their relationship to a “special strategic partnership,” aimed at adding “speed and content” to their relationship in the areas of foreign affairs, trade and investment, defence, and S&T. During the discussions, India reaffirmed its view of the ROK as an integral part of its newly articulated Act East Policy while President Park explained the ROK’s Northeast Asia Peace and Cooperation Initiative.
The joint statement issued regarding the “special strategic partnership” laid out a new structure for the India-ROK relationship and put a new emphasis on security and defence cooperation; it also referred to the countries’ ongoing relationship in the areas of trade, energy, environment, and cooperation in S&T. Subsequent visits in the next three years saw these ideas being fleshed out in more detail.
<9> Further, in 2017, under President Park’s successor Moon Jae-in, the ROK launched the New Southern Policy—a policy complementary to India’s Act East Policy. The goal of both policies is to enhance the links between the two countries and ASEAN.
Cooperation in science and technology
President Moon Jae-in’s official visit from 8-11 July 2018—the longest by any leader of the two countries—marked both sides’ growing interest in the relationship. The joint statement issued following the visit emphasised that the two countries saw a synergy between India’s Act East Policy and the ROK’s New Southern Policy. The statement also recognised the “strong complementarities between the two countries in the area of science and technology” and sought to encourage collaboration at all levels.
<10>
A number of MoUs were signed to this effect. Among them was one designed to establish a Future Strategy Group. The signatories were Suresh Prabhu, minister of commerce and industry, and Harsh Vardhan, minister of S&T, from the Indian side, and South Korea’s Kim Hyun-chong, minister for trade, industry, and energy, and Young Min, minister for science and ICT. The MoU’s goal was to foster cooperation in building pioneering technologies to benefit from the fourth industrial revolution. The thrust areas included Internet of things (IoT), artificial intelligence (AI), big data, smart factories, 3D printing, electric vehicles (EV), advanced materials like ceramics, composites, semiconductors and polymers, and affordable healthcare for the elderly and disabled.
<11>
Additionally, an MoU on cooperation in the field of S&T was also signed between Girish Sahni, the head of the Council for Scientific and Industrial Research (CSIR), and Wuhn Kwang Yun, the chairman of ROK’s National Research Council of Science and Technology. Its target areas were affordable water purification, intelligent transport systems, and new materials. MoUs were also signed in the areas of biotechnology, information and communication technology (ICT), and railways technology.
<12>
Extending the theme of cooperation in S&T, the 2018 visit witnessed the fourth meeting of the India-Korea S&T Ministers Steering Committee. Among the important decisions taken was the agreement to establish an Indo-Korean Centre for Research and Innovation. The centre is intended to act as a hub for the systematic operation and management of all cooperative programmes in research, innovation, and technology transfer.
<13> The ministers also agreed that the proposed Future Strategy Group would build a collaborative platform to utilise the potential of the two countries for innovation. In the first stage of the plan, the two sides will co-fund collaborative, enterprise-led R&D projects dealing with a) Digital Transformation b) Future Manufacturing c) Future Utilities and d) Healthcare. In addition to this, a decision was taken to set up two more India-Korea Joint Network Centres in the areas of cyber physical systems, AI, IoT, and semiconductor electronics.
<14>
Shortly after President Moon’s visit, the South Korean National IT Industry Promotion Agency opened a new India office in Bengaluru. It also announced a three-month boot camp called KIB India Lounge 10, a co-working and co- living space for ROK startups looking to expand into India. The idea is to assist them in understanding the Indian ecosystem and facilitate their entry into Indian and South Asian markets.
<15>
Later that year, the Seoul Peace Prize Committee conferred the 2018 prize to Prime Minister Narendra Modi in recognition of his work in “improving international cooperation, raising global economic growth, and accelerating the human development of India by promoting economic growth and reducing social and economic disparities.”
<16> Prime Minister Modi made an official visit to the ROK in February 2019 to receive the prize as well as hold discussions with his counterpart. There, the two countries launched a Startup Hub to step up increased cooperation in high-tech. India’s ‘Startup India’ initiative is currently funded at US$ 1.4 billion while South Korea plans to spend US$ 9.4 billion till 2020 to increase the supply of capital for startups and create a venture-friendly environment. A theme that emerged from his speeches and talks with ROK leaders and businessmen was the ambition to collaborate in exploiting the fourth industrial revolution.
The next step is likely to be the setting up of a Korean industry park, in line with the ones set up by countries like Japan. The Koreans have shortlisted Bengaluru and Gurgaon as two potential cities for its location. The aim is to create an ecosystem that would encourage smaller Korean companies to set up facilities in India.
Looking Ahead
Healthcare
India has been looking at the South Korean experience in a number of other areas. One example is the effort to give its flagship universal healthcare scheme,
Ayushman Bharat, some depth using technology. South Korea was one of the first countries to ensure universal healthcare through an Act of parliament—beginning with its Medical Insurance Act in 1963 and leading up to the National Health Insurance Act in 1999. A full 97 percent of the ROK population is covered by a contributory health insurance scheme, and the poorest three percent are provided for by a government public health insurance scheme.
<17>
Automobile Industry
As noted earlier, India and the ROK have a solid base for cooperation in technology. India also has high hopes from the continued progress of the South Korean automobile industry in the country. In 2019, the ROK company Kia Motors debuted in the Indian market with the launch of the SUV Seltos, which soon became a runaway hit. Given their role in establishing the Indian automobile industry, it is more than likely that Korean automobile companies will also play a significant role in the spread of electric and autonomous vehicles in the country. Hyundai Motors is already marketing Kona Electric, the first all-electric SUV in India.
<18> The company’s ancillary, Hyundai Mobis, has also emerged as a major supplier of high-tech automotive parts used for autonomous and electric cars, such as sensors, displays, and lamps. Other companies active in this area are Samsung and LG Chem; their business in auto components often overtakes that in items like semiconductors and batteries.
The one area where India has so far been unable to exploit its ROK connection is shipbuilding. It is well known that South Korea is one of the leading shipbuilders in the world. This could be crucial for India. Given India’s economic trajectory, the government would be interested in positioning India as a manufacturing hub of inland vessels as well as LPG, LNG, cruise, and chemical tanker ships.
<19> India and the ROK did sign an inter-governmental MoU for defence industry cooperation in shipbuilding in April 2017.
<20>
However, though India has expanded its shipyard facilities, especially in the private sector, it has not modified its policies appropriately. If the government wants to enter into a partnership with South Korean and Japanese shipyards to build modern facilities in India, corresponding policy changes have to occur.
Defence
Most people in India often underestimate South Korea’s defence industrial base. Its forces are mainly equipped with Korean-designed and made equipment: small arms, tanks, armoured fighting vehicles, engineering vehicles, radar systems, communications equipment, optics and night vision systems, artillery, surface-to-surface missiles, military robots, fighter aircraft, destroyers, frigates, and submarines. Many of the companies involved in defence production have familiar ancestry, such as Daweoo, Samsung, Posco, and Hyundai.
<21>
Perhaps the real extent of Korean defence capability was revealed when it began the KF-X 5th generation fighter programme in 2001. In 2010, the ROK roped in Indonesia to finance 20 percent of the project in return for 50 fighters. The ROK has also linked up with the aeronautical company Lockheed to provide technical assistance and take up some portion of the project’s costs. Earlier this year work began on the first prototype, which will be powered by a GE 414 engine.
<22>
India and South Korea’s defence ties go back to the Korean War of 1950-53. Most recently, these ties have been strengthened with the “special strategic partnership” formed during Modi’s visit to South Korea in 2015. Over the years, the two sides have signed many MoUs and agreements. They also conduct regular interactions; these began at a deputy minister level in 2013 and have since been elevated to the ministerial level. A Joint Committee meeting—a bilateral dialogue for cooperation in defence industries and logistics that takes place between the minister of defence acquisition and programme administration and the secretary of defence production—is held every year, with a total of seven having been held so far. A total of four Steering Committee meetings—bilateral dialogues for joint defence R&D that take place between Defence Research and Development Organisation (DRDO) & Defence Acquisition Program Administration (DAPA) / Agency for Defense Development (ADD) of ROK—have also been held till 2017.
Earlier, in the early 1980s, India had purchased Korean Sukanya-class offshore patrol vessels for the Indian Navy. Its recently inducted K-9 Vajra self-propelled howitzer is also based on South Korea’s K-9 Thunder and was built in partnership between Samsung Techwin and Larsen & Toubro. In 2019, India selected the Korean Hanwha K30 Biho mobile air defence system for its army, which beat out the Russian Tunguska system.
During Defence Minister Rajnath Singh’s visit to Seoul in early September 2019, the two sides signed an agreement extending logistical support to each other’s navies. They also signed an agreement to further defence educational exchanges.
<23> This is an important development that must be seen in conjunction with the ROK government’s recent deliberations about whether to play a role in the American-led security efforts in the Straits of Hormuz.
<24>
This area is, of course, in India’s backyard. Moreover, both the ROK and India have a shared interest in maintaining peace and stability in the Persian Gulf region because of their dependence on oil from there. India, too, has a naval mission providing security to its civilian vessels in the area. There is no reason why the two countries cannot collaborate in the region given their “special strategic partnership.” India can provide the ROK’s vessels with military logistic support, as it does with the US, France, and Japan. In turn, should India need logistics support in the Pacific Ocean, the ROK could fulfil that role.
Shipbuilding
Again, the one area in which progress has been elusive is shipbuilding. The 2017 MoU on defence shipbuilding envisioned a Korean shipyard being designated to assist Hindustan Shipyards Limited (HSL) in upgrading and modernising its facilities for executing naval shipbuilding projects.
<25> The MoU aimed to operationalise a deal between Hyundai Heavy Industries and HSL to collaborate in the making of five fleet support ships, one of which would be made in Korea and the others in HSL. The deal, however, did not go through because some conditions placed by its ROK partner were not agreeable to the Indian Ministry of Defence.
<26>
Something similar happened to another US$ 5-billion deal between India and ROK. The Indian Navy is currently operating six obsolete, Soviet- era MCMVs; however, an agreement to locally build 12 high-tech mine countermeasure vessels collapsed in 2018. The South Korean company Kangnam had won the 2008 global tender, but the deal remained unsigned because of issues over costs and technology transfer.
<27> The deal has since been refloated, and Kangnam has expressed a continuing interest in competing for it. No decision has been taken as of the time of writing this article.
<28>
Conclusion
The India-ROK relationship has grown steadily in the last 20 years and today, the two countries have a mature, mutually beneficial trade and technology association between them. Slowly and steadily, the countries are also exploring and building their relationship on security. One key aspect of this is in the realm of defence industry; the ROK is a good fit for India’s ambitions to create a defence industrial base. Much like India—and unlike the US, Japan, UK, Germany or France—the ROK had no defence industry to speak of in the
1950s. But over the years it has built up an impressive defence industry that manufactures submarines, fighter jets, helicopters, tanks, artillery systems, missiles, and EW systems. Therefore, there are lessons in the ROK experience that would be invaluable for India. Further, there is the vast, unexplored area of shipbuilding—both military and civilian—that the two countries must engage in with a greater sense of urgency than they have shown so far.
For India, which has an ambitious ‘Make in India’ vision, the ROK could be the country it most needs to work with. After all, the ROK’s development experience share more in common with India’s compared to that of the other developed countries. Beyond trade and commerce, India would do well to also study various aspects of the ROK’s governmental policies that have guided its path from an underdeveloped colony to a highly developed country.
This essay originally appeared here
Endnotes
<1> Sungchul Chung, “
Excelsior: The Korean Innovation Story”,
Issues in Science and Technology xxiv, no. 1 (Fall 2007).
<2> “
How countries go high-tech”,
The Economist, 10 November 2001.
<3> Lakhvinder Singh, “
The rise of Modi and the future of India-South Korea Ties”,
Science Technology and Security Forum, 4 July 2019.
<4> “
Annual Report of the Ministry of External Affairs 2006–07”, Ministry of External Affairs, Government of India, 33–34.
<5> “
Annual Report of the Ministry of External Affairs 2009–10”, Ministry of External Affairs, Government of India, 31.
<6> “
Annual Report of the Ministry of External Affairs 1995–96”, MEA Library, 28–29.
<7> Difficulties with government policies compelled Samsung to halt production in India, but there are plans now to revive it. (Source: Writankar Mukherjee, “
Samsung may switch on TV production in India”,
The Economic Times, 20 November 2019.)
<8> “
Welcome to LGSI”, LG Soft India.
<9> “
India-ROK Joint Statement for Special Strategic Partnership”, Ministry of External Affairs, Government of India, 18 May 2015.
<10> “
India and Republic of Korea: A vision for people, prosperity, peace and our future”, Ministry of External Affairs, Government of India, 10 July 2018.
<11> “
List of MoUs/Documents signed between India and the Republic of Korea during the State visit of the President of Korea to India,” Ministry of External Affairs, Government of India, 10 July 2018.
<12> Ibid.
<13> “
The 4th India-Korea Science & Technology Ministers Steering Committee meeting was held in New Delhi on 9th July 2018”, Department of Science and Technology, Government of India, 10 July 2018.
<14> Ibid.
<15> Neha Jain, “
NIPA India opens its doors to South Korean startups with launch of ‘Lounge 10’”,
YourStory, 26 July 2018.
<16> “
Prime Minister Modi awarded the 2018 Seoul Peace Prize”, Ministry of External Affairs, Government of India, 24 October 2018.
<17> Nidhi Sharma, “
India turns to Korea for tech push to Ayushman Bharat”,
Economic Times, 25 June 2019.
<18> “
Experience India’s first all-electric SUV”, Hyundai India.
<19> Sudhakar Vaddi, “
India finds a new friend”,
Millennium Post, 10 July 2018
.
<20> “
India and Republic of Korea sign Inter-Governmental MOU for Defence industry cooperation in shipbuilding”, Press Information Bureau, Government of India, 21 April 2017.
<21> The range of products can be seen from a brochure produced by the Korea Defence Industry Association.
<22> “
Design of South Korea’s KF-FX frozen, prototype to be built by 2021,”
Defenseworld, 26 September 2019.
<23> ANI, “
India, S Korea ink 2 MOUs to boost defence cooperation,”
Business Standard, 6 September 2019, .
<24> Seong Yeon-cheol, Lee Wan and Noh Ji-won, “
S. Korea considering deploying troops to Strait of Hormuz,”
Hankyoreh, 13 December 2019.
<25> “Design of South Korea’s KF-FX frozen, prototype to be built by 2021,” op. cit.
<26> Santosh Patnaik, “
HSL deal with Hyundai falls flat”,
The Hindu, 8 May 2018.
<27> Vivek Raghuvanshi, “
India cancels minesweepers deal with South Korea”,
Defence News, 9 January 2018.
<28> Huma Siddiqui, “
Wait for Made in India minesweeper gets longer for the Navy: sources,”
Financial Express, 28 November 2018.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
PREV
