In a significant development for India’s international trade relations, exports of manufactured goods to South Korea have shown robust growth, outpacing imports since the implementation of the Comprehensive Economic Partnership Agreement (CEPA) in 2010.
This trend, spanning from financial year 2010-11 (FY11) to FY24, underscores the positive impact of the trade agreement on India’s manufacturing sector.
According to a comprehensive analysis of trade data from the Centre for Monitoring Indian Economy (CMIE), India’s exports of manufactured goods to South Korea have grown at an impressive rate of 6.4 per cent since FY11.
This growth rate surpasses both the overall export growth to South Korea (4.3 per cent) and the growth in manufactured goods imports from the country (4.7 per cent) during the same period.
The CEPA, which came into effect in January 2010 after more than 12 rounds of negotiations, aimed to reduce trade barriers across a wide range of goods.
Recent reports suggest that an upgraded agreement may be in the works, potentially further enhancing trade relations between the two nations.
A closer look at the data reveals that engineering goods have been the primary driver of India’s manufactured exports to South Korea. This category has experienced a remarkable compound annual growth rate (CAGR) of 8.4 per cent, with exports rising from USD 947.3 million in FY11 to USD 2.7 billion in FY24.
While electronics (14.8 per cent CAGR) and readymade garments (11 per cent CAGR) showed higher growth rates, their total export values remain significantly lower compared to engineering goods.
Other key categories contributing to India’s manufactured exports to South Korea include chemicals and related products, as well as textiles (excluding readymade garments). However, it’s worth noting that the textile sector has experienced a decline since FY11.
On the import front, electronic goods have emerged as one of the fastest-growing segments among major manufactured goods imported from South Korea. The value of electronic imports has more than doubled, rising from USD 1.6 billion in FY11 to nearly USD 4 billion in FY24.
This trade data paints a picture of evolving economic ties between India and South Korea, with India’s manufacturing sector gaining ground in the South Korean market.