South Korea more aggressive than Japan in India, registers higher trade volume year after year

ACN EXCLUSIVE: On their mission to look for an alternate turf beyond China to expand their trade and settle for years to come, Japan and South Korea both are trying hard to strengthen business ties with India. However, having entered India late than Japan, South Korea has exhibited an aggressive approach to gaining ground in India. Not only Korea’s trade with India has been touching new heights year after year, but the number of its companies entering India is also increasing much faster than its arc competitor Japan.  

The latest India-Korea bilateral trade volume data accessed exclusively by Asian Community News Network (ACN Network) reveals, South Korea’s annual trade with India in the year 2022 (Jan-Dec) reached an all-time high figure of USD 27.8 bn. This included export of USD 18.9 billion and imports USD 8.9 billion from India. This increase in exports and imports was aided by a rebound in economic activity and industrial output. India-Korea bilateral trade figures were registered at USD 23.7 bn last year.

In deep contrast, Japan lingers around USD 20 bn annually for the past two years. 4th largest investor in the Indian economy with cumulative FDI inflows of USD 38.13 bn (April 2000 to September 2022), Japan registered bilateral trade volume with India at crossed USD 18.5 bn in the year 2022 (Jan-Nov).

If India and South Korea are committed to taking their bilateral trade to USD 50 bn by the year 2030, Japan has pledged to invest JPY 5 trillion in next five years in India.

During his maiden visit to India in March last year, the Japan Prime Minister Fumio Kishida had announced an investment target of “five trillion yen” (USD 42 billion) in the next five years during a summit with India PM Narendra Modi.

Previously the former President of South Korean Moon Jae-in together with PM Modi had pledged to take bilateral trade to USD 50 bn by 2030. South Korean trade bodies such as Korea Trade-Investment Promotion Agency (KOTRA), Korea International Trade Association (KITA), Korean Chamber of Commerce in India (KOCHAM), and I-KOSME are striving hard in India to expand Korean corporate footprint in India.

The number of Korean companies in India has been increasing year after year. Samsung setting up its world’s biggest smartphone manufacturing facility in Noida in Uttar Pradesh is the finest example of Korea’s aggressive approach in India. According to an unconfirmed report, the number of Korean companies just before Covid 19 pandemic in India was around 750, and it cross the 800 mark in 2022.

Joonhwa BIN, Managing Director, Southwest Asia, Korea Trade-Investment Promotion Agency (KOTRA), New Delhi said, “The bilateral trade between India and South Korea has achieved an all-time high volume of USD 27.8 billion during the year 2022. Semiconductor exports rose 95% YoY as the demand and sales of essential semiconductor items such as automotive, electronic products and IT equipment increased and emerged as the largest export item. The exports from South Korea to India included automotive and electronic components, semiconductors, and components for electrical appliances such as white goods. Imports from India to South Korea included galvanized steel, petrochemical products, etc.”

KOTRA, New Delhi is the economic section of the Embassy of the Republic of Korea in India. Headquartered in Seoul, KOTRA operates worldwide to promote Korea’s trade and investment globally.

On the contrary, the number of Japanese companies in India has been stagnant in the last four years, and in fact, the number decreased last in 2021. The total number of Japanese companies in India was registered at 1441, 1454, 1455, and 1439 in the year 2018, 2019, 2020, and 2021 respectively. Japan aims to reverse the trend in 2022 and take the graph upward.

In its bid to increase the number of Japanese companies in India, Japan government has resorted to strategy shift towards India, and has decided to attract small and mid-sized companies as well as start-ups from Japan. Japan is exploring newer investment opportunities in non-conventional sectors such as e-commerce, retail, electronics, processed food, fresh fruits, agro-tech, healthcare, R&D, Co-research, and space.

Takashi Suzuki, Chief Director General of Japan government’s trade promotion arm Japan External Trade Organisation (JETRO) recently told Asian Community News Network that Japan would have to diversify into the business sectors which had not been explored yet by Japanese companies in India.

“In India 80 percent of the Japanese companies are big or listed ones and rest 20 percent are small medium enterprises. However, our investment strategy in countries like China and ASEAN is just the reverse, and hardly 20 percent of the Japanese companies are large segment and 80 percent are SMEs. This should change in India as we plan to attract more SMEs and start-ups especially in non-automotive and service sector from Japan,” said Mr. Suzuki who was previously deployed as Director General, JETRO, Bengaluru for four years.

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