India and South Korea have embarked on a significant dialogue to address the widening trade deficit under the Comprehensive Economic Partnership Agreement (CEPA). The 12th round of talks, co-chaired by Kapil Chaudhary, Joint Secretary, Department of Commerce, and Park Geun-oh, Director General for Trade Agreement Policy, Ministry of Trade, Industry and Energy, Republic of Korea, focused on enhancing bilateral trade relations.
Trade Deficit Concerns
The trade deficit between India and South Korea has been a growing concern, reaching USD 15.35 billion in the fiscal year 2025-26, up from USD 15.2 billion in 2024-25. This marks a consistent increase from USD 14.71 billion in 2023-24 and USD 14.57 billion in 2022-23.
| Fiscal Year | Trade Deficit (USD Billion) |
|---|---|
| 2021-22 | 9.4 |
| 2022-23 | 14.57 |
| 2023-24 | 14.71 |
| 2024-25 | 15.2 |
| 2025-26 | 15.35 |
Strategic Discussions
During the talks, both countries agreed to form sub-groups to explore cooperation in digital trade, supply chain, and strategic industrial collaboration. These discussions are part of a broader effort to upgrade the existing CEPA, which was implemented in January 2010.
"Both sides acknowledged India's bilateral trade deficit, which has risen significantly since the IK CEPA came into force in 2010, and agreed to address the issue within the overall IK (India-Korea) CEPA framework," the ministry stated.
Future Trade Goals
India and South Korea have set an ambitious target to double their bilateral trade to USD 54 billion by 2030, from the current USD 27 billion. This goal underscores the commitment to fostering a more balanced trade relationship.
Addressing Non-Tariff Barriers
Indian exporters face challenges in penetrating the South Korean market due to non-tariff barriers, including stringent standards and certification requirements. Addressing these barriers is crucial for enhancing trade in goods and services.
The ongoing negotiations cover various aspects such as rules of origin, investment, and sanitary and phytosanitary (SPS) standards. These discussions aim to further liberalize trade and promote investment between the two nations.
