India and South Korea are to sign a trade pact today to cut duties on goods including car parts and electronics, South Korea’s Ministry of Foreign Affairs and Trade said yesterday in Seoul.
Hyundai Motor Co may benefit most from the deal, in which the two nations agreed to reduce an average 12.5 percent tariff on auto parts exports from South Korea over eight years.
Hyundai, which operates an auto manufacturing plant near Chennai India, sold 244,030 vehicles there in the year ended March 31, trailing only Maruti Suzuki India Ltd in the nation of 1.2 billion people. The biggest South Korean automaker gets 55 percent of sales from emerging markets, including India and China, where auto demand has withstood the global slowdown.
India will eliminate tariffs on 74.5 percent of South Korean exports within eight years and reduce duties on a further 10.9 percent within 10 years, the ministry said. These will include auto parts, tankers, electronic goods, machinery parts and synthetic rubber.
South Korea will eliminate tariffs on 84.7 percent of Indian exports within eight years and reduce duties on a further 5 percent within 10 years. These will include polycarbonates, leather, industrial diamonds, gasoline and corn for livestock.
The two nations decided to exclude other agricultural goods, finished automobiles, fisheries and textiles from the deal.
The South Korean law implementing the pact is expected to take effect on Jan. 1, said Choi Kyong-lim, the director-general overseeing trade agreements at the ministry.
The two nations will also expand job opportunities for skilled personnel from India in the field of information technology, engineering, management consulting, machinery and telecommunications, and scientific research, the ministry said. It didn’t specify any quotas on the number of Indian nationals expected to take up jobs in South Korea in the future.
India has also opened up its market to investment in all its industries with the exception of agriculture, fisheries and mining. South Korea will be able to invest in food processing, textiles, garments, chemicals, metals and machinery, it said.
The two countries had resolved “all outstanding issues” in September and have since been reviewing the legal wording of the document, known as a Comprehensive Economic Partnership Agreement, the ministry had said at the time. They had initially hoped to sign the deal by the end of last year.
Bilateral trade between India and South Korea rose 39 percent last year to US$15.6 billion. South Korea exported US$3.6 billion of goods to India, and imported US$1.6 billion in the first six months of the year.
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