Building on a strong and multifaceted relationship, in 2015, India and South Korea relations were elevated to a “Special Strategic Partnership”, reflecting the growing convergence of interests and cooperation. With 2025 marking ten years of this partnership, it is the right time to take stock, reflect on the challenges posed by shifting global supply chains, evolving economic alliances, and increasing geopolitical uncertainties as well as seek new avenues for collaboration between the two ‘like-minded’ countries.
Bilateral trade increased by 64 per cent from 2015 to 2024, reaching US$ 27.4 billion. However, India’s exports to Korea have grown at a modest 4 per cent annually, while imports have risen faster at 6.4 per cent, widening the trade deficit to US$ 15.6 billion. India’s top exports to Korea include mineral fuels, aluminium, and organic chemicals, while imports are led by electrical machinery, steel, and plastics. India’s export potential to Korea is vastly underutilized. In 2024, it was estimated at US$ 98 billion – 16 times higher than current export levels.
Key areas with high additional export potential include refined petroleum products, medicaments, aluminium, and aircraft parts. Sectors like pharmaceuticals, electrical machinery, and nuclear reactors also present strong opportunities where India has global competitiveness. FDI flows from Korea to India totalled US$ 5.1 billion between 2015 and 2025. On the other hand, Indian investment into Korea has been limited at just US$ 368 million over the same period. In recent years the technological revolution has offered huge opportunities to trading countries in the world but at the same time they are facing huge challenges due to rapid, unpredictable, and interconnected changes across geopolitical, economic, technological, environmental, and social domains.
India and South Korea can work together to strengthen the existing relationship, seize new opportunities, and navigate through these evolving challenges – setting a course for the coming years. The recent turmoil triggered by tariffs imposed by the U.S. administration has unsettled global trade, with some countries having finalized tariff arrangements while others remain in negotiations. South Korea appears to have agreed to a 15 per cent tariff, though the official White House fact sheet is still awaited, while India currently faces an interim 25 per cent tariff as talks continue.
What remains important is that both India and South Korea share a commitment to a rules-based international order. We are witnessing a weakening of multilateral institutions like the WTO, which have struggled to respond effectively to the geopolitical crises shaping today’s global landscape. Should we reform the existing frameworks to make them more relevant and responsive to current challenges? Or is it time to design new systems that better reflect today’s realities? It becomes all the more important to explore how we can reinvigorate the principles of rules-based trade. India and South Korea could work jointly in multiple forums like the G20, WTO, and UN to push for reforms, especially in global trade rules, digital governance, and climate finance.
The shifting geopolitical landscape has brought supply chain resilience to the forefront. In this context, South Korea is actively advancing its New Southern Policy (NSP), which aims to strengthen ties with Southeast Asia and India. With India’s economy growing at 6.5 per cent, supported by a young workforce, rising human capital, digital and AI advancements, rapid urbanization, and increasing female labour force participation, a deeper partnership between South Korea and India holds strong potential. Korean investments can be encouraged in India’s PLI-backed sectors such as electric vehicles, electronics, and solar energy. Technological disruptions have increased global dependence on critical minerals like never before.
The rise in export restrictions by resourcerich countries has pushed others to pursue greater self-sufficiency. South Korea’s “K-Semiconductor Belt” initiative exemplifies this effort – bringing together chip designers, manufacturing fabs, materials suppliers, R&D institutes, and universities to create a cohesive innovation ecosystem. In India, the Semiconductor Mission aims to build a robust domestic semiconductor ecosystem, facilitating global partnerships and workforce development in R&D and manufacturing. This presents significant opportunities for India and South Korea to collaborate and leverage their complementary strengths. The two countries should also set up innovation corridors to connect start-ups, and incubators across both countries.
Korea can leverage India’s successful Digital Public Infrastructure (DPI) model for digital inclusion and joint innovation in fintech and gov-tech. There are also traditional sectors where India and South Korea can leverage each other’s strengths. South Korea’s shipbuilding industry has evolved significantly since the 1960s, becoming the world’s largest by the early 2000s. South Korea has maintained its leadership through continued investment in R&D, digital shipbuilding, and eco-friendly technologies. As India seeks to strengthen its own shipbuilding capabilities, a partnership with South Korea could play an important role in accelerating this growth.
India and South Korea must continue to expand and deepen their existing economic relationship and highlight the contemporary imperatives for a stronger strategic economic partnership, explore newer areas of collaboration and also deliberate on concrete policy measures and collaborative frameworks that can facilitate the “Second wave” of South Korean investments in India. These are some of the critical issues that deserve attention and thoughtful discussion and dialogues which are vital to strengthen and deepen mutual understanding.
(The writers are, respectively, Professor and Senior Fellow at the Indian Council for Research on International Economic Relations (ICRIER), New Delhi.)
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