From Trade to Supply Chains: Policy Implications of the Korea-India Summit

Recently, South Korea and India agreed to expand bilateral trade to USD 50 billion by 2030 and to advance cooperation centered on supply chains and emerging industries, laying an institutional foundation through expanded strategic-industry cooperation, the establishment of an Industrial Cooperation Committee, and the resumption of negotiations to improve the Comprehensive Economic Partnership Agreement (CEPA). The new Industrial Cooperation Committee is expected to serve as the core institutional foundation of Korea-India cooperation, addressing the fragmentation of existing cooperation channels and building a whole-of-government platform specialized in industrial cooperation. The summit marks a turning point in Korea-India cooperation, shifting the focus from trade-centered cooperation to supply chain and industrial cooperation. It strengthens supply chain resilience and transforms the bilateral cooperation framework toward a production- and technology-based model through expanded cooperation in strategic resources and high-value-added industries. Expanding cooperation with India will require proactive efforts to address India’s trade balance concerns, as improving the trade balance remains an important policy priority and an important consideration in trade negotiations; building a sustainable partnership calls for establishing global production and export hubs and increasing the local sourcing of intermediate goods. Raising CEPA utilization requires reforming rules of origin and related systems, as complex origin criteria and certification procedures constrain use of the agreement. Stronger linkages between development cooperation and Korea-India industrial cooperation is also needed, as the limited integration of official development assistance (ODA) with industrial cooperation reduces the effectiveness of implementation.