India and Republic of Korea (ROK) have considerable overlap of interests, with little differences of opinion; and this is likely to only get strengthened in future as our common areas of interest gain intensity. PM Modi’s government and the ROK government have created enough space for cooperation between the two countries, despite overhanging issues with allies, rivals and competing stakeholders in the Indo-Pacific region.
CEPA (Comprehensive Economic Cooperation Agreement) was signed in 2009 between the two countries, and raised to a Special Strategic Partnership in 2015, with a view to undertake co-production and co-development of military hardware, strengthen intelligence cooperation and step-up partnership in space and cyber security.
India has sought to include services, IP, and tech cooperation among other changes, to account for the increase in trade deficit- high value products imported by India vis-a-vis low value exports. Also, ROK goods lose competitiveness due to local sourcing, and Indian goods due to Chinese competitive pricing. Our countries can use comparative advantages for mutual benefit.
The New Southern Policy (2018) was adopted by President Moon Jai-In, following which during his visit to Seoul in 2019 the Indian Defence Minister Shri Rajnath Singh invited ROK defence industry to invest in India stating they could use India as a springboard to export equipment manufactured in India to friendly countries in SE Asia, Mid East, Asia and Africa.
The New Policy was articulated by President Yoon Suk Yeol at the last ASEAN summit in 2022, indicating a clear tilt towards the US but also stating his Indo-Pacific strategy wherein ROK looks for trade with countries other than its immediate neighbourhood.
India too has its Look/Act East Policy. Clearly there is a strategic convergence. Trade between us crossed USD 21.5 Bn in 2018, 20.6 Bn in 2019, and targets USD 30 Bn by 2030. India has sought to include services, IP, and tech cooperation among other changes, to account for the increase in trade deficit- high value products imported by India vis-a-vis low value exports. Also, ROK goods lose competitiveness due to local sourcing, and Indian goods due to Chinese competitive pricing. Our countries can use comparative advantages for mutual benefit. South Korea has a strong manufacturing base, and India has highly skilled low-cost human resources.
India’s Inbound FDI has increased considerably over the years, as seen in the Figure below:
This dramatic change was the result of India’s adaptation of digitalisation in manufacturing, 4G and 5G related equipment, telecommunication devices etc in keeping with ushering in the Fourth Industrial revolution.
The figure below shows the enormous improvement in inflows from South Korea to India in the last three to four years. It is recorded that ROK’s defence exports in 2022 tripled to USD 10 billion (compared to 2020), in the aftermath of the Ukraine war.
Outbound FDI and Exports from Korea to China, India and Vietnam
There is now greater potential to exploit trade opportunities particularly in high technology fields.
Strategic engagement revolving around the QUAD involves trading partners of South Korea, addressing maritime trade, energy, cyber-attacks and security. PM Modi is on record to say that member states are committed to rules-based, free, open, democratic and inclusivity in this region.
The Make in India mission is gathering momentum to reduce import dependence. The “positive” import list bans direct import of numerous systems, drones being one such, to encourage domestic R&D. India’s Atma Nirbhar (Self Reliant) Bharat Initiative is a base requirement for all joint R&D, joint development, or collaborative development.
Imperatives from the S Korean side are also understandable – the need for faster and easier processes to do business, IP issues with the US and other countries amongst others – but a way can forward can be found if both sides are willing. India may well turn out to be the preferred partner of S Korea, if it is included into the global supply chain, with both sides taking advantage of prevailing opportunities.
Let’s take a look at the low hanging fruit.
The collaboration production of K-9 Gun System in India has been a success, albeit with numerous issues which need to be smoothened out. A repeat order for another 100 guns is underway. However, technologies for power packs and gun barrels need to be shared more openly. As far as red tape is concerned, both sides need to resolve the issues which caused delays in their own ministries.
Notably, even after Transfer of technology OT was sanctioned, there was a lapse of 4-5 months on the Korean side. The DAPA (Defence Acquisition Program Administration) and ADA (Agency of Defence Development) would appreciate that Joint Ventures (JVs) with Indian firms would be mutually beneficial.
It may be noted that a large global order from a foreign country has recently been won by an Indian firm for 155mm medium guns.
Self-Propelled Air Defence (SP AD) Gun Missile System
Despite successful trials in India, the order was not placed on the Korean firm. While the reasons for it may be geo-political (protest by the Russian side), and may perhaps be understood by the ROK side, an open discussion between the two sides would go a long way in understanding each other’s’ perspectives and obligations.
However, there is still scope for collaboration particularly if it can be worked out to bring in 50 % Indigenous Content, as part of Make in India, in this project.
Submarines, LPDs (Landing Platform Docks) and MCM (Mine Counter Measure) Vessels
The P-75 I program of India is underway and a Foreign OEM is being shortlisted as Strategic Partner. However, the proven technology of integrating AIP (Air Independent Propulsion) with S Korea makes it a front runner to partner with Mazagaon Docks or L&T of India. This program is perhaps ten times the size of the K-9 program done earlier. It is also not under US IPR, making it a strong recipe for success. There is still considerable opportunity for ROK firms to participate in bids for co-development/production of MCM vessels and LPDs.
MSME and Tier 2 Level
South Korea could look at collaboration at the MSME and Tier 2 levels, where a large number of possibilities exist for production of smaller components and assemblies as part of Make in India. Discussions can be organised at these levels, and partners found in the Indian market. Dual use items like electro-optics, electronics and other consumer good items would help open up the restrictive nature associated with defence items.
India has considerable talent in fabless, while South Korea has huge capability in fab. JVs in this field hold immense potential for both sides to capture global markets. Samsung already has a big consumer electronic presence in India and taking it forward to semiconductors would be a natural progression if both sides are willing. SK-Hynix is another possible collaborator.
The Government of India has announced a massive incentivisation policy. A China + 1 policy will give S Korea a hedging capability, improve dependability and provide resilience as a supplier. It would be realised that India is a huge country with not only big markets but also considerable resources.
Smart Manufacturing and other fields too have scope for collaboration, as 5G penetration increases in India.
This field has a constant 24x7x365 application, starkly evidenced during the Ukraine War. The Digital India Mission and 5G where the applications to IOT open up, present an unprecedented opportunity to industry players. India and Korea face similar vulnerabilities and threats which can cripple critical infrastructure, making it a possible area for close cooperation.
The Indian space sector which was earlier dominated only by ISRO, has been opened up to private industry. The start-up behind India’s first private space launch, Skyroot Aerospace plans to launch a satellite in 2023.
In 2022, ROK put a 1.5-ton satellite into 800 Km orbit, and a 3 ton class at 300 Km with its Space launch Vehicle 2. The program for a Korean Positioning System may have much to exchange with India’s NavIC (Navigation with Indian Constellation). Space-based communications is another possible area for both sides to cooperate.
Brahmos missiles, developed via collaborative R&D with Russia since more than a decade, has been in production, and sale of these to friendly countries at the G2G level is in progress with Vietnam and Philippines. A similar model may be adopted by both, for sale to a third country.
Strategic and defence industrial cooperation between our countries has just begun, and there is a large scope ahead for mutual benefit, keeping in mind our common strategic interests. It requires open dialogue and apparent willingness, for both governments to adopt a long-term collaborative view.