India, South Korea to upgrade trade pact, deepen tech and supply chain ties

India and South Korea have agreed to upgrade their Comprehensive Economic Partnership Agreement (CEPA), originally signed in August 2009 and in force since J...

What Happened

India and South Korea have agreed to upgrade their Comprehensive Economic Partnership Agreement (CEPA), originally signed in August 2009 and in force since January 2010, with the 12th round of upgrade negotiations expected to begin in May 2026 and aimed for conclusion by the first half of 2027.
The bilateral summit identified priority sectors for deepened cooperation: semiconductors, electronics, e-mobility, green energy, shipbuilding, artificial intelligence, and digital trade.
Both sides agreed to initiate an Economic Security Dialogue specifically to address supply chain resilience and strategic dependencies — a direct response to global disruptions in semiconductor and critical mineral supply chains.
Defence cooperation was elevated, with India exploring co-development, co-design, and technology transfer for next-generation defence systems, including anti-aircraft guns and missile systems, moving toward a third phase of defence partnership.
A bilateral trade target of $50 billion by 2030 was set, nearly doubling the current trade volume of approximately $27 billion.

Static Topic Bridges

Comprehensive Economic Partnership Agreement (CEPA) — Structure and Scope

A Comprehensive Economic Partnership Agreement is broader in scope than a traditional Free Trade Agreement (FTA). While an FTA focuses primarily on tariff elimination for goods, a CEPA covers an integrated package encompassing goods, services, investment, intellectual property rights, government procurement, technical standards, and sanitary and phytosanitary measures.

India–South Korea CEPA was signed on 7 August 2009; entered into force on 1 January 2010.
Negotiated over more than three years across twelve rounds of talks.
Covers tariff elimination or reduction on approximately 93% of India's export items to South Korea and ~85% of South Korea's exports to India.
Bilateral merchandise trade grew from ~$12 billion (2009–10) to over $27 billion (2022–23) following the agreement.
India's key exports under CEPA: petroleum products, minerals, organic chemicals, iron & steel, marine products.
India's key imports: machinery, electronics, automobiles, and steel from South Korea.
Distinction: CEPA > CECA (Comprehensive Economic Cooperation Agreement) > FTA — in terms of sectoral coverage and ambition.

Connection to this news: The upgrade negotiations reflect that the 2009 CEPA pre-dates the current era of semiconductor competition, supply chain fragmentation, and green energy transition — necessitating a contemporary framework that includes digital trade, critical technology cooperation, and Economic Security provisions.

India–South Korea Special Strategic Partnership

India and South Korea established diplomatic relations in 1973. The relationship was elevated to a "Special Strategic Partnership" in May 2015 during a state visit to Seoul. The partnership framework encompasses political-diplomatic, economic, defence, and people-to-people dimensions.

Diplomatic relations established: 1973.
Elevated to Special Strategic Partnership: May 2015.
India's Act East Policy (announced November 2014, replacing the 1991 Look East Policy) identifies South Korea as a key partner alongside ASEAN nations, Japan, and Australia.
South Korea's "New Southern Policy" (announced 2017) similarly prioritised India as a strategic economic partner.
A Joint Strategic Vision for 2026–2030 was adopted at the April 2026 summit.
South Korea's President Lee Jae-myung's April 2026 visit was the first South Korean presidential state visit to India in eight years (since 2018).

Connection to this news: The CEPA upgrade and new Economic Security Dialogue represent the economic operationalisation of the Special Strategic Partnership, translating political commitments into binding trade and technology frameworks.

Semiconductor Supply Chain and Critical Technology Geopolitics

Semiconductors — integrated circuits that power smartphones, EVs, defence systems, and AI hardware — have emerged as the defining "critical technology" of the 21st century. The US CHIPS and Science Act (2022), EU Chips Act (2023), and India's Semiconductor Mission (2021) all reflect state-led efforts to build domestic chip manufacturing capacity and reduce dependence on concentrated supply chains.

India's Semicon India Programme (2021): ₹76,000 crore incentive package for semiconductor and display manufacturing.
South Korea hosts two of the world's dominant semiconductor manufacturers: Samsung Electronics and SK Hynix — together controlling a major share of global DRAM and NAND flash memory production.
The India–Korea Digital Bridge was launched at the April 2026 summit to deepen cooperation in AI, semiconductors, and information technology.
Supply chain resilience rationale: COVID-19 and geopolitical disruptions (US–China tech decoupling) exposed vulnerability of just-in-time global semiconductor supply chains.
The bilateral Economic Security Dialogue is modelled on similar mechanisms: US–Japan Economic Policy Consultative Committee, Quad Critical and Emerging Technology Working Group.

Connection to this news: India's decision to create a dedicated Economic Security Dialogue with South Korea signals that technology partnerships are now treated as strategic assets equivalent to defence cooperation — a shift from purely commercial trade logic to geo-economic statecraft.

Defence Co-Production Framework

India's defence procurement policy distinguishes between several acquisition categories: "Buy (Indian-IDDM)" for indigenous design and development, "Buy (Indian)" for domestically manufactured goods, "Buy & Make (Indian)" for licensed production, and "Buy (Global-Manufacture in India)" for foreign OEM-led in-country production.

India and South Korea have an existing defence relationship: India has acquired K9 Vajra self-propelled howitzers (South Korean K9 Thunder) through a "Buy & Make (Indian)" arrangement with Hanwha Defence.
The Defence Acquisition Council (DAC) under the Ministry of Defence gives Acceptance of Necessity (AoN) for procurements; Cabinet Committee on Security (CCS) approves major acquisitions.
The third phase of defence partnership envisaged co-development and co-design — moving beyond licensed production to joint R&D, which qualifies as the highest tier of defence-industrial cooperation.
South Korea's defence exports have grown significantly: it is now among the top 10 global arms exporters, with recent major sales to Poland, Australia, and Romania.

Connection to this news: The move toward co-development of missile systems and next-generation defence platforms elevates India–South Korea defence ties from a buyer-seller relationship to a genuine industrial partnership aligned with India's Aatmanirbhar Bharat (self-reliant India) defence manufacturing goals.

Key Facts & Data

India–South Korea CEPA signed: 7 August 2009; in force: 1 January 2010.
Current bilateral trade volume: ~$27 billion (2022–23).
Target bilateral trade by 2030: $50 billion.
12th round of CEPA upgrade talks: May 2026 (expected); conclusion target: H1 2027.
South Korea's presidential state visit to India: first in 8 years (last: 2018).
India's Semicon India Programme incentive: ₹76,000 crore.
CEPA tariff coverage: ~93% of India's exports, ~85% of South Korea's exports.
India's Act East Policy announced: November 2014 (replaced Look East Policy of 1991).
Special Strategic Partnership established: May 2015.
MoUs exchanged at the April 2026 summit: 15+ agreements across shipbuilding, AI, semiconductors, clean energy, defence.