After three and a half years of negotiations and talks, South Korea and Indiahave decided to reduce or eliminate tariffs by signing a comprehensive economic partnership agreement, (CEPA) in Seoul. The CEPA, which covers merchandise and service, investment and economic cooperation, is a de-facto free trade agreement, according to the foreign ministry. For South Korea, the agreement with India will benefit its automobile part makers, steelmakers, machinery builders, petrochemical industry, and electronic goods makers.
After the deal goes in effect at the start of next year, as targeted by both sides, India will trim or eliminate tariffs on 85% of its imports from South Korea within a decade, while South Korea will do the same for 90% of imports from India.
Trade between the two sides surged to US$15.6 bln last year from US$5.5 bln in 2004 while cumulative investment in India by South Korean firms totaled US$2.2 bln as of March this year. The deal awaits approval from South Korea's Parliament.