Number of Korean companies to cross 1000 mark in India soon as influx continues undeterred 

NEW DELHI: The influx of Korean companies into India has witnessed an upsurge in the last three years, and the trend continues to stay, and resultantly their number is all set to cross the 1000 mark soon.

As many as 66 new Korean companies entered India during the pandemic-struck year 2020-21 taking the total tally to about 816 from the earlier figure of 750 companies in the previous year. An undisclosed number of companies from Korea made India their bases during FY 2021-22 also. Korean investment into India almost doubled in just four years from US$ 1.39 billion in 2017 to US$ 2.69 billion. Korean investment amounted to around US$396 million during the economic downturn period alone.

However, the latest masterstroke came to the fore in the form of a recent US$ 5 billion deal between Adani Group and South Korea’s steel major POSCO reaching an agreement to set up an integrated steel mill in Gujarat.

It’s a proven fact that giant foreign investment projects of the kind of Samsung, Hyundai, KIA, etc. have brought along a score of component suppliers and vendors in the MSME segment from Korea in the past.

To be commissioned by the year 2026, the proposed POSCO steel plant in Gujarat would not come up in isolation and is all set to attract about 100-150 Korean ancillaries and OEM suppliers, and component vendors around it in the Mundra port region taking the total number of Korean companies in India beyond 1000 mark by that time.

So far the bilateral trade valuing about US$ 21 billion has been in sectors, including energy, electronics, shipbuilding, information technology, cyber-security, etc., and now both sides have agreed to foster cooperation in non-conventional sectors like renewable energy, hydrogen electronics, and shipbuilding industries.

Both the countries are committed to taking the bilateral trade to US$ 50 billion by 2030, which was looking to be an impossible target to achieve by the year 2018 the business between both sides was sluggish.

The real impetus came in 2019 when KIA set up its USD 1 billion car manufacturing facility in Andhra Pradesh, along with a number of Korean OEM and component supplier companies in the middle, small and micro-scale segments.

Prior to this, when Samsung set up its world’s largest smartphone manufacturing factory in Noida, Uttar Pradesh, this NCR town became a hub of a score of Korean SMEs that followed Samsung to supply it with the components.

The uptrend is not going to stop here as there is something more to come from Korea during the current year 2022-23.

Related article: Indian consumers now prefer Korean brands over Japanese: Amitabh Kant, CEO, NITI Aayog

Soon to follow are bilateral pacts between the two Asian tigers in chemical and telecom sectors with multi-billion dollars investment portfolios. These deals are likely to be signed sometime around April and May this year. In both the events, some more hundreds of small, medium, and micro Korean companies are expected to make their way into India taking the total number way beyond 1000.

By the end of FY 2022, the hitherto impossible-looking target of achieving the magical figure of US$ 50 billion bilateral trade would seem ‘achievable’ and very well within the reach.

South Korea has repeatedly reiterated that India is its long-term partner, and the former has really big business plans for it.

In November last, during his address at the 4th India Korea Business Partnership Forum organized by the Confederation of Indian Industry (CII) and Korea International Trade Association (KITA), the Korean trade minister Han-Koo Yeo had said that as the fifth largest economy, India has continued to play the role of growth engine for the global economy even during the recent economic downturn.

“In 2020, India saw a 13% growth in FDI inflow amounting to a total of US$ 57 billion while global FDI volume plunged by 42 % year on year. In 2021, the Indian economy is forecasted to grow at 10% as well. Korean investment into India almost doubled in just four years from US$ 1.39 billion in 2017 to US$ 2.69 billion for the 4 years after,” said Han-Koo Yeo.

Another big potential leap of Korean trade in India is the possible influx of Korean young and micro-entrepreneurs.

Already having apex trade promotion bodies like KOTRA, KITA, KOCHAM, KOSME, IKSC, and others, South Korea recently set up a new trade body Korean Young Commerce Association not only to support the existing young and micro-entrepreneurs in India but to attract more young Korean entrepreneurs to India.

This newly formed NextGen trade body plans to handhold and assists about 100 young entrepreneurs and startups during the current year.

For this, the association will work closely with the Embassy of the Republic of Korea in India as well as will be supported by the state-run Korean Small and Medium Enterprises Association (KOSMA).

In 2019, KOSMA had inked a mutual “help each other” agreement with India’s national MSME body – the Federation of Indian Micro and Small & Medium Enterprises (FISME) to assist each other in boosting investment and facilitating smooth entry and functioning of Korean SMEs into India but nothing moved as the Covid-19 pandemic struck the very next year.

The newly created platform would reach out to all Korean young self-employed, micro-entrepreneurs and startups in New Delhi and NCR towns, Mumbai, Chennai, Bangaluru, and other cities of India, as well as those who are sitting on the fence and wondering whether or not to go to India or not.