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India-Korea: Building Blocks for $50-Billion Bilateral Trade by 2030 & Other Investments

While the Korean Wave or ‘Hallyu’, referring to the global popularity (including India) of K everything may seem like a recent phenomenon, the year 2024 marks the 51st anniversary of diplomatic relations between the two countries. According to the India Brand Equity Foundation, bilateral trade between India and Korea grew by 21.46% to $27.8 billion in 2022-23. South Korea is one of India’s largest Foreign Direct Investment (“FDI”) contributors, having invested $5.78 billion in key sectors such as metallurgy, automobiles, and electronics from April 2000 to December 2023.[1] With continuing and strengthening economic ties, both countries continue to remain bullish with the aim to reach $50 billion in bilateral trade by 2030. 

While it’s India’s moment to shine as an investment destination, South Korea is well poised to make the most of it, considering geopolitical circumstances, government initiatives and sector policies, all favour cementing a strong relationship.

India – A Special Strategic Partner

South Korea and India share a mutual interest due to India’s ‘Act East’ policy and South Korea’s ‘Act Southern’ policy. In South Korea’s first comprehensive regional strategy – the Indo-Pacific Strategy – Seoul has called New Delhi a special strategic partner. India can further help Korea diversify its economic portfolio and supply chains, given the US-China trade war. Currently, China is South Korea’s largest trading partner.

Additionally, several government and industry initiatives further facilitate trade and investment, such as (i) a South Korea-focused programme ‘Korea Plus’ was included under the ‘Invest India’ scheme in 2019, working closely with governments, corporates and industry associations to facilitate investment; (ii) the Joint Ministerial Committee of India and South Korea are undertaking annual review of the Comprehensive Economic Partnership Agreement (“CEPA”), which will ensure a more balanced and equitable trade; (iii) India-South Korea Electronic Origin Data Exchange System has been launched to streamline implementation of CEPA via electronic exchange of information; and (iv) increased collaboration in the start-up ecosystem – ‘Korea-India SME and Start-Up Centre’, which was established to assist South Korean start-ups in India, to facilitate joint innovation between the two economies, including signing a Memorandum of Understanding with Invest India in April 2021 to assist Korean startups with networking, B2B connections, etc., in India. The Indian Chamber of Commerce in South Korea has been playing a crucial role in receiving trade enquiries from Indian businesses for identifying Korean local partners. It also offers know-how to South Korean businesses in terms of business culture and prospects for business and investment in India and vice-versa.

The India Advantage

It is not India’s moment to shine without a reason – India’s demographic dividend, low-cost manufacturing, resilience, stable government, rule of law and the size of the economy and opportunities are often factors that attract foreign investors. Robust and stable domestic demand on the back of rising middle income, expanding private consumption and investments, increasing purchasing power parity, structural reforms and ease of doing business will further propel India towards an upward growth trajectory. With the government streamlining compliances and laws by scrapping more than 35,000 compliances and around 1,500 archaic laws, India has witnessed an uptick in interest and FDI inflows from South Korea. In particular, inflow of funds from large South Korean corporations, such as Samsung, accounted for 57.2% of the total investment.

According to statistics from the Korea Trade-Investment Promotion Agency (“KOTRA”) and Korean Exim Bank, South Korean investments into India are largely concentrated in sectors such as manufacturing, wholesale and retail trade, financial and insurance activities, electricity, gas, steam and water supply. There are other sectors too such as defence where South Korean defence major Hanwha Défense helped Larsen & Toubro (L&T) build 155 mm, 52-caliber tracked self-propelled artillery system – K9 Vajra in 2018. Indian and Korean companies have also been discussing and exploring collaborations to build diesel submarines, utility helicopters, lithium batteries for future-ready combat vehicles, and technology transfers for advanced naval shipbuilding to develop and support naval projects in India, among others. Similarly, gaming is another sector that has been attracting attention –Krafton Inc. (“Krafton”), the Korean gaming company behind Battlegrounds Mobile India, plans to double its investments in India despite the government’s decision to increase GST to 28%. The company will bring in Rs 1,200 crore ($150 million) over the next 2-3 years to support gaming and Artificial Intelligence (AI)-focused companies. India’s live-streaming gaming start-up Loco has raised $42 million, led by South Korea’s early-stage venture fund, Hashed. For gaming, 100% FDI through the automatic route is allowed under the Electronic System and IT & BPM sectors. Karnataka and Telangana have come up with state-level dedicated policies for Animation, Visual Effects, Gaming, Comics, and Extended Reality (AVGC-XR) that will guide sector growth till 2029.

However, South Korea’s interest appears most concentrated in sectors such as electric vehicles, electronics and semiconductors, thanks to the Government of India’s (“GoI”) big policy push.

  • Electric Vehicles: India has ambitious plans of greening its automotive sector by 2030. A 2023 Bain & Company Report too suggests that electric vehicles (“EVs”) could account for more than 40% of India’s automotive market and generate revenues of over $100 billion by 2030, but only if there is product development, go-to-market (GTM)/distribution optimisation, B2B focus, software development, and scaling of charging infrastructure. These numbers make a compelling case for increased domestic as well as foreign investments in the sector. The GoI had approved the National Mission on Electric Mobility, 2011, further promulgated in 2013, and the National Electric Mobility Mission Plan of August, 2012, and launched in 2013, were both approved by the GoI to accelerate the adoption of EVs, it was in 2015-16 that the Department of Heavy Industry (DHI), being the nodal department for the automotive sector, formulated a scheme for the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME). The Indian government is working towards demand incentives and a network of charging stations. On the policy front, the government is offering many incentives to stimulate demand. Additionally, Vehicle Scrappage Policy 2021, Production Linked Incentive (“PLI”) Scheme for advanced chemistry cell battery storage, Battery Waste Management Rules, 2022, and the National Mobility Mission, including certain state-led incentives such as those in Gujarat and Tamil Nadu, are intended to act as catalysts to facilitate a shift towards EVs. States have come up with their own policies, offering a mixed hamper of financing support and incentives, capital subsidy, reimbursement of stamp duty and power, land and skill development incentives. South Korean automotive giants such as Hyundai Motors and Kia are already significant players in the Indian auto sector. Hyundai has recently acquired General Motors’ plant in Maharashtra’s Talegaon and announced its intention to utilise it to increase production capacity to launch additional EV models in the country.
  • Semiconductor: The Indian semiconductor market is expected to reach $55 billion by 2026, more than 60% of which is driven by three industries: smartphones & wearables, automotive components, and computing & data storage.[2] The government on its part has approved the Semicon India Programme with an initial financial outlay of Rs 76,000 crore ($9.13 billion approx.) for the development of a sustainable semiconductor and display ecosystem in the country to reduce dependency on imports, recognised from supply chain issues during COVID-19.[3] The GoI has established 4 (four) schemes under the India Semiconductor Mission. Any project proponent will be eligible to avail various tax benefits, including exemption from basic customs duty on machinery, electrical equipment, other instruments and their parts for use in fabrication of semiconductor wafer or in assembly, testing, marking and packaging of semiconductor chips. Leading semiconductor and memory chip maker SK Hynix, too, plans to establish manufacturing units here, buoyed by the policy push. Simmtech, which is the world’s biggest manufacturer of semiconductor substrates, plans to invest Rs 1,250 crore for a chip components plant in Gujarat.
  • Electronics: The GoI has been providing financial and infrastructural support to give a boost to the electronics sector. It has also launched electronic manufacturing clusters, including the PLI Scheme launched in 2020 for 14 sectors including automobiles, electronics, auto components, etc., and the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors. South Korean companies such as Samsung and LG already have significant presence in India and have been a part of the India growth story for decades now.
  • Manufacturing: India allows 100% foreign direct investment or FDI under the automatic route in sectors such as medical devices, space, manufacturing of components, systems or sub-systems for satellites, etc. Korean companies such as Lotte, Krafton, POSCO, etc., have shown significant interest in India’s food processing, gaming, and steel sectors, respectively. Other sectors such as healthcare and pharmaceuticals, renewable energy, infrastructure, etc., too, offer unparallel opportunities, given India’s ambition of becoming a developed economy by 2047 and its commitment to achieving net zero emissions by 2070. In addition to “traditional” businesses and sectors,Indian startups are likely to create 50 million new jobs and add $1 trillion to the country’s GDP by 2029-30 (FY30), according to a Confederation of Indian Industry (CII) report. India may also be witness to 300 new unicorns between 2024 and 2035, the report added. The India-Korea Startup Hub is a one-stop platform, which was conceptualised as a part of a joint statement signed between KOTRA and Invest India in 2018. The Hub aims to foster collaborations between startups, investors, incubators and aspiring entrepreneurs of both the countries and provide them with the necessary resources for market entry and expansion.

Concluding Thoughts

While geopolitics, government initiatives and sectoral policies may all be in favor of the India-South Korea friendship, trust, confidence and tone for trade between the two nations is also increasing. South Korean companies are looking at India as a destination for traditional businesses such as manufacturing, but a whole ecosystem of other South Korean businesses will also likely follow through. Some trends for inbound FDI will continue to be the same, such as mid-market companies probably looking for a good joint venture partner and the big conglomerates and companies investing directly. The risk, appetite and cheque sizes seem to be increasing, and bilateral trade relations between the countries appear optimistic and promising in the years ahead.


[1] Invest India, Korea-India Relations, Korean Investments in India – Companies & Business Opportunities (investindia.gov.in) (Last visited on May 9, 2024).

[2] Deloitte, India Set to Enter an Era of Revolution in Live Sports, Semiconductor Chips, AVOD, and 5G (Last visited on May 14, 2024)

[3] Press Information Bureau, Indian Semiconductor Mission (Last visited on May 14, 2024).

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Partner in the General Corporate Practice at the Mumbai office of Cyril Amarchand Mangaldas. Siddharth advises on corporate and commercial transactions, mergers & acquisitions, joint ventures, private equity and venture capital investments. He has been consistently recommended as a Leading Lawyer Corporate by…

Partner in the General Corporate Practice at the Mumbai office of Cyril Amarchand Mangaldas. Siddharth advises on corporate and commercial transactions, mergers & acquisitions, joint ventures, private equity and venture capital investments. He has been consistently recommended as a Leading Lawyer Corporate by AsiaLaw, Legal500 and Chambers & Partners (Asia Pacific) in Real Estate and M&A practice. He can be reached at siddharth.hariani@cyrilshroff.com.

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Principal Associate in the General Corporate practice at the Mumbai office of Cyril Amarchand Mangaldas. Saloni has experience and focuses on corporate advisory and transactional matters, which mostly include Private Equity and M&A transactions. She has represented many large corporate houses, promoters, and…

Principal Associate in the General Corporate practice at the Mumbai office of Cyril Amarchand Mangaldas. Saloni has experience and focuses on corporate advisory and transactional matters, which mostly include Private Equity and M&A transactions. She has represented many large corporate houses, promoters, and private equity funds in M&A transactions and foreign private equity investments. These include transactions in the education/edutech and digital media sectors. She brings to the table experience of not only structuring and closing numerous investor driven transactions, but also of undertaking the negotiation of promoter/sell-side requirements on several occasions. She can be reached at saloni.shroff@cyrilshroff.com

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Associate in the General Corporate practice at the Mumbai office of Cyril Amarchand Mangaldas. Harshvardhan graduated from NALSAR University of Law, Hyderabad in 2022 and has experience in general corporate, disputes, white-collar crimes and investigations, and Fintech matters through his experience of 3…

Associate in the General Corporate practice at the Mumbai office of Cyril Amarchand Mangaldas. Harshvardhan graduated from NALSAR University of Law, Hyderabad in 2022 and has experience in general corporate, disputes, white-collar crimes and investigations, and Fintech matters through his experience of 3 rotations at CAM. He can be reached at harshvardhan.tripathi@cyrilshroff.com.