Skand Tayal | Investments from South Korea may grow as strategic relations intensify

The two-day visit of South Korean foreign minister Park Jin to India earlier this month was an important milestone in Seoul implementing its recently launched “Indo-Pacific Strategy”. Foreign minister Park asserted that the two countries are engaged in “contributive diplomacy” to boost freedom, peace and prosperity in the region and beyond.

The visit was well covered in the South Korean media, highlighting that both countries are vibrant democracies with “immense clout in international culture through Bollywood and K-Pop”. Some observers have noted that both nations have a common rival in China, which poses “major security challenges and leads international trade”.

The South Korean establishment is not very vocal but is quite concerned about the creeping expansionism of China into the South China Sea and the increasing threat to Taiwan. As a country whose more than 80 per cent of the economy depends on foreign trade, South Korea is wary of any threat to the prevailing international maritime order which may impede free navigation for uninterrupted trade.

Foreign minister Park Jin is the author of South Korea’s “Indo-Pacific Strategy” which was unveiled in December 2022. This was an important step as the previous Left-leaning administration of President Moon Jae-in was reluctant to clearly articulate its approach towards the region. The former Democratic Party government rarely used the term “Indo-Pacific” and continued to use “Asia-Pacific” to refer to the region, which in effect excluded India and Indian Ocean from having any strategic convergence with the Pacific.

Predictably, US national security adviser Jake Sullivan called the new policy “a reflection of shared commitment to the region’s security and growing prosperity”. But the Chinese foreign ministry spokesperson categorised it as working towards “exclusive coteries”.

In its broad policy formulation, the Yoon government’s Indo-Pacific Strategy brings South Korea more in alignment with the vision of the four Quad nations -- the United States, India, Australia and Japan -- that the entire Indo-Pacific region be firmly anchored in the practice of international norms and commitment to the rules-based international order.

Identifying India as a “key partner in South Asia”, the strategy devotes a paragraph to India affirming that South Korea will “advance (its) special strategic partnership with India”. South Korea will “increase strategic communication and cooperation through high-level exchanges in foreign affairs and defence, while strengthening the foundation for enhanced economic cooperation by upgrading the ROK-India Comprehensive Economic Partnership Agreement”.

Mr Park Jin’s visit is an early step in the implementation of thisn new strategy. President Yoon Suk-yeol has been taking a more pronounced pro-US stand on international issues like the Ukraine-Russia conflict. In a significant move, President Yoon had attended the Nato summit in Spain in June 2022 to broaden South Korea’s strategic partnership with the Western democracies.

The Yoon administration is also taking concrete and bold steps to seek innovative solutions to the historic irritants which bedevil bilateral relations with Japan. Greater strategic understanding between South Korea and Japan is critical for strengthening the democratic forces in the Indo- Pacific. Both Japan and South Korea have defence treaties with the United States. South Korea is India’s “Special Strategic Partner” and Japan is New Delhi’s “Strategic and  lobal Partner”. The US has been quietly nudging the two countries to smoothen their relations. In early March, the South Korean government announced a scheme to pay compensation to its own citizens who were forced to work in Japanese factories during the Second World War. Seoul’s plan proposed that the South Korean companies who benefited from the historic 1965 Japan-ROK Treaty to normalise relations would donate to a $3 million fund for distribution among the survivors.

Mr Park Jin’s visit marks the golden jubilee of the establishment of diplomatic relations between India and South Korea. Since the 1990s, after the advent of India’s Look East Policy, India-ROK relations have matured and have full bipartisan support in both the countries.

The core of the bilateral relationship continues to be economic. The bilateral trade touched a new high of $23 billion in 2022 but the trade deficit against India is a cause of worry. Recently, commerce minister Piyush Goyal was constrained to state publicly that he expected South Korean companies operating successfully in India to increase their sourcing from Indian manufacturers. He chided Korean manufacturers in India saying that they prefer to source components from South Korea even if these are more expensive compared to the Indian products.

South Korean companies need to make India a manufacturing hub and become full partners in India’s quest of “Atma Nirbhar Bharat”. Some strategic guidance from the South Korean leadership to their Korean “chaebols” could be a game-changer as the Indian market of 1.4 billion consumers is quite positive about purchasing Korean products.

South Korean economic players are upbeat about the opportunities in the growing Indian market. The prestigious Korean Institute for International Economic Planning recently opened its office in New Delhi. It has only two offices abroad, the other being in China.

Mr Park Jin said that the future economic partnership with India would be for supply chain stabilisation with India as a part of manufacturing value chains. India-South Korea scientific and technical cooperation will be speeded up in new areas like AI, Big Data, bio-technology and space exploration. It is notable that institutional linkages are getting stronger.

The Korean SME and Start-Up Agency recently signed a MOU with the Foundation for Innovation and Technology Transfer at IIT Delhi. Foreign minister Park Jin’s visit was timely and will speed up the second wave of South Korean investments in India, besides harmonising Indian and South Korean perceptions and actions to ensure a free, open and peaceful Indo-Pacific.