India, South Korea decide to start negotiations to upgrade economic pact

What Happened

• India and South Korea formally decided to resume and expedite negotiations to upgrade their Comprehensive Economic Partnership Agreement (CEPA), originally signed in 2009 and in force since January 2010.
• The announcement came during a State Visit by the South Korean President to New Delhi (April 19–21, 2026) — the earliest such visit by a Korean head of state after assuming office, and the first in eight years.
• Both sides signed 15 government-to-government Memorandums of Understanding (MoUs) covering CEPA improvement, digital trade, green economy, shipbuilding, semiconductors, and supply chain collaboration; companies from both countries signed an additional 20 MoUs.
• The two countries set an ambitious target to nearly double bilateral trade from approximately $27 billion to $50 billion by 2030.
• The 12th round of CEPA upgrade negotiations is expected to begin in May 2026, with both sides aiming to conclude the process by the first half of 2027.
• Both sides resolved to work together to ensure peace and stability in the Indo-Pacific region, signalling alignment on maritime security and supply chain resilience.

Static Topic Bridges

India–Korea CEPA (2009/2010): Structure and Trade Imbalance

The India–Republic of Korea Comprehensive Economic Partnership Agreement was signed in August 2009 and entered into force on January 1, 2010. It committed both nations to progressively reduce or eliminate import tariffs on a wide range of goods, expand investment opportunities, and liberalise trade in services. CEPA is wider in scope than a Free Trade Agreement (FTA) — it covers goods, services, investment, intellectual property, and competition policy. Despite the agreement, bilateral trade has remained structurally imbalanced: India's exports to South Korea are around $6.5 billion while imports from Korea stand at approximately $18.5 billion, resulting in a persistent trade deficit for India.

CEPA vs FTA: Key Distinctions

A Free Trade Agreement (FTA) primarily reduces tariffs on goods. A Comprehensive Economic Partnership Agreement (CEPA) goes further — it includes services trade, investment facilitation, technical cooperation, and regulatory harmonisation. India has CEPAs with South Korea, Japan, UAE, and Singapore, and an FTA with ASEAN. The India–Korea CEPA is broader than India's ASEAN FTA because it has deeper services and investment chapters.

Indo-Pacific Strategy and India–South Korea Strategic Partnership

India and South Korea elevated their bilateral relationship to a "Special Strategic Partnership" in 2015. South Korea is an important partner in India's Indo-Pacific vision — it is a major shipbuilding nation, a technology power, and a democracy sharing India's interest in a rules-based maritime order. South Korea's strategic significance has grown given its proximity to the Taiwan Strait flashpoint and its role in global semiconductor supply chains (Samsung, SK Hynix). The two sides resolved to cooperate on peace and stability in the Indo-Pacific, linking economic partnership with strategic alignment.

India Semiconductor Mission and PLI for Electronics

India has been actively trying to build a domestic semiconductor ecosystem. The Production-Linked Incentive (PLI) scheme for semiconductors was launched in December 2021 with a corpus of ₹76,000 crore (approximately $10 billion) under the Semcon India Programme. The India Semiconductor Mission 2.0 (announced Budget 2026–27) has a financial outlay of ₹8,000 crore and focuses on semiconductor equipment, materials, and full-stack Indian intellectual property. South Korean firms Samsung and SK Hynix are eyeing R&D and software-led entry into India's semiconductor sector.

Key Facts & Data

• India–Korea CEPA in force: January 1, 2010
• Bilateral trade (2025): ~$27 billion; target $50 billion by 2030
• India's trade deficit with South Korea: approximately $12 billion
• Government-to-government MoUs signed: 15; company-level MoUs: 20
• 12th round of upgrade talks to begin: May 2026
• South Korean President's visit: April 19–21, 2026 — first Korean presidential visit to India in 8 years
• Major sectors for cooperation: semiconductors, shipbuilding, steel, green energy, e-mobility, digital trade, AI
• POSCO–JSW Steel collaboration: 6 MTPA integrated steel plant in India; low-carbon steel JV in Odisha by 2031
• India–South Korea Special Strategic Partnership established: 2015
• India–South Korea Digital Bridge: new platform for joint AI and digital innovation