India & Korea Trade Ties in 2025: Driving Growth, Innovation, and Regional Prosperity

NIRAMANDHAN September 18, 2025


Introduction

India and South Korea have cemented a partnership built on centuries of cultural exchange, matured by decades of diplomatic cooperation and economic engagement. By 2025, this collaboration is more important than ever, supporting each country’s ambitions in manufacturing, technology, and global market connectivity. With bilateral trade nearing $27 billion annually, both nations are pursuing ambitious targets, hoping to reach $50 billion by 2030. Strategic agreements, particularly the Comprehensive Economic Partnership Agreement (CEPA), have lowered trade barriers and introduced new opportunities, but barriers and imbalances persist.thediplomat+3

Historical Context and Evolution of India-Korea Trade

Formal diplomatic relations between India and South Korea began in 1973. However, the roots of commercial interaction stretch back over two millennia, weaving together shared legacies in art, religion, and maritime exploration.dras+1

Trade volume took off significantly following the 2010 implementation of CEPA—India’s first such agreement with an East Asian nation. By 2011, trade jumped to $20.55 billion, propelled by reduced tariffs, smoother customs procedures, and sectoral market access.indembassyseoul+2

Over the years, the partnership has further deepened, with each successive summit and high-level visit building momentum towards economic, technological, and even security-driven cooperation. The creation of the ‘Korea Plus’ desk in India exemplifies this drive to foster a pro-investment climate and address Korean business interests proactively.idsa+1

Current Trade Statistics and Key Sectors (2025)

The India–Korea bilateral trade reached approximately $27 billion in FY2024-25. South Korea is India’s 13th largest FDI investor, and the investment portfolio is broad—covering metallurgy, automotive, electronics, healthcare, and machine tools.oec+2

Major Indian Exports to Korea

  • Engineering goods: $2.6 billion

  • Petroleum products: $964 million

  • Chemicals (organic/inorganic): $730 million

  • Drugs and pharmaceuticals: $187 million

  • Iron, steel, and aluminum: significant but challenged by competitiveness issuesbusiness-standard+2

Major Korean Exports to India

  • Electronics and electronic goods (e.g., mobile phones, semiconductors): nearly $4 billion

  • Machinery and mechanical appliances

  • Steel and metal products

  • Automobiles: Hyundai and Kia have made India a automotive export hub

  • Chemicals, including specialty and high-tech variantstradingeconomics+2

This trade pattern underscores both complementarity (India’s resource exports meeting Korea’s tech-intensive goods) and the challenge of India’s persistent trade deficit.

Growth Drivers and Sectoral Opportunities

Several factors underpin the resilience and increasing trajectory of India–Korea trade:

  • Manufacturing Synergies: India’s Make in India and PLI schemes align seamlessly with Korean strengths in manufacturing, electronics, and automotive.thediplomat+1

  • FDI and Technology Transfer: Korean giants like Samsung, Hyundai, LG, Kia, and POSCO have committed sizable investments in Indian operations, bringing global best practices and innovation.mitigram+2

  • Diversification into High-Tech: Both nations are prioritizing partnerships in semiconductors, artificial intelligence, 5G/6G, and green technology.economictimes+1

  • Digital Economy and Services: There is untapped potential in IT, e-commerce, fintech, and e-mobility solutions as CEPA negotiations expand into digital trade.icrier+1

  • Healthcare and Pharma Collaboration: India’s pharmaceuticals sector is gaining traction in Korea, supporting mutual interests in affordable healthcare.ibef+1

The Comprehensive Economic Partnership Agreement (CEPA)

Signed in 2010, CEPA was envisioned as a catalyst for deeper economic integration. Its key accomplishments include:

  • Extensive tariff reduction or elimination across thousands of product lines

  • Promotion of cross-border investment through streamlined processes

  • Support for services trade, professional mobility, dispute resolution, and IPR protectionindia-briefing+1

However, critics argue that structural imbalances remain, with Indian goods still facing non-tariff barriers and slower market access in Korea, especially in sectors like agriculture and textiles. By 2025, both sides have entered the tenth negotiation round to update CEPA for the digital age, aiming to cover:dras+1

  • E-commerce regulations

  • SME support and easier compliance

  • Greater market access for Indian farm, pharma, IT, and SME products

  • Lowering of hidden non-tariff and procedural barriersafleo+1

A robust, forward-looking CEPA could add $10–15 billion in fresh trade value within five years of implementation.dras

Investment Trends and FDI Highlights

South Korea’s cumulative FDI in India has crossed $6.6 billion by early 2025, concentrated in high-growth sectors:

  • Automotive: Hyundai, Kia—major production and export bases

  • Electronics: Samsung’s Noida facility ranks among the largest global mobile phone plants

  • Metallurgy: POSCO’s steel ventures support infrastructure and constructionmitigram+3

Indian investments in Korea, though smaller (just under $1 billion), are steadily increasing—driven by ventures like Tata Daewoo, Novelis, and pharma firms expanding in high-growth Korean sectors.indembassyseoul+1

Trade Imbalances, Barriers, and Challenges

Despite the success stories, the India–Korea trade dynamic is marked by a structural trade deficit for India, with Korean imports consistently outpacing Indian exports. Key reasons include:oec+1

  • Value-added dominance by Korean exports (technology, electronics, machinery)

  • Indian exports focused on lower-margin resources

  • Persistent non-tariff barriers in the Korean market limiting Indian product accessicrier+1

Addressing These Gaps

  • Upgrading CEPA to expedite mutual market access

  • Easing logistics and certifications for Indian exporters

  • Promoting joint ventures in high-tech and green sectors to leverage strengths mutually

  • Encouraging greater Korean investment in Indian MSMEs and digital infrastructureafleo+1

Strategic and Geopolitical Dimensions

India and South Korea’s economic relationship is increasingly tied to the broader Indo-Pacific strategy and regional security goals:

  • Indo-Pacific Cooperation: Shared interest in keeping sea lanes secure, building resilient supply chains, and counterbalancing disruptive regional forces.idsa+1

  • Space and Science Partnership: Joint efforts in satellite launches and R&D showcase the transition from purely mercantile collaboration to high-tech strategic partnership.thediplomat+1

  • Green and Clean Energy Initiatives: Climate change commitments, hydrogen economy pilots, and clean tech investments dominate joint priority lists.economictimes+1

The Human and Cultural Dimension

Though often overlooked amid economic numbers, people-to-people links are burgeoning:

  • Korean Culture (“Hallyu”) in India: K-drama, K-pop, and Korean cuisine are increasingly popular among Indian youth, stimulating travel and lifestyle businesses.dras

  • Indian Diaspora and Exchange Programs: Growing educational and work-related mobility is creating new networks, supporting cross-border entrepreneurship.indembassyseoul+1

  • Tourism and Hospitality: Korea’s specialized services industry is eyeing India’s outbound tourism market, where overall outflows are rising fast in the post-pandemic world.icrier

Recent Developments and Future Prospects

Major Milestones (2023–2025)

  • Bilateral trade grew by more than $1.5 billion, led by strong growth in autos, pharma, and financial servicesmitigram

  • Completion of key CEPA update rounds, bringing digital trade and SME-first policies to the tableafleo+1

  • High-profile investment summits and forums catalyzed FDI, as seen in the launch of the India–Korea Partnership Economic Forum in Seoulthediplomat

  • Expansion of “Make in India” initiatives, with Korean partners bringing capital and operational expertiseeconomictimes+1

  • New focus on artificial intelligence, semiconductors, and resilient, green supply chainseconomictimes+1

Opportunities for the Next Decade

  • Achieving $50 Billion Target: Realistic provided CEPA 2.0 and seamless logistics are realizedtaxtmi+2

  • Collaborative Research & Manufacturing: Joint ventures in renewables and high-tech manufacturing have the potential to create thousands of new jobs and fresh export revenuedras+1

  • Market Diversification: South Korean firms can reduce over-reliance on existing export destinations by investing more in India’s fast-growing market.thediplomat+1

  • Digital and Knowledge Economy: Mutually beneficial partnerships in IT, gaming, fintech, biotechnology, and smart health solutions remain underleveragedicrier+1

Actionable Policy Recommendations

For policymakers and businesses invested in the India–Korea trade relationship, the following actions are critical:

  • Finalize and implement CEPA upgrades promptly, prioritizing digital trade and MSME accessafleo+1

  • Reduce procedural, logistics, and certification barriers facing Indian exporters in Koreaicrier+1

  • Scale government-to-government initiatives focused on supply chain security and technology transfereconomictimes+1

  • Support cross-border startup incubation and venture capital networksdras+1

  • Deepen people-to-people diplomacy via scholarships, tech exchanges, and language trainingindembassyseoul+1

Conclusion

India and South Korea stand at a pivotal crossroads—their partnership, driven by shared opportunities in advanced manufacturing, digital transformation, and sustainable growth, can reshape the economic geography of Asia in the coming decade. With proactive policy reforms, mutually beneficial investment, and innovative business collaboration, the goal of $50 billion in bilateral trade by 2030 is not just achievable—it is within imminent reach. The true potential, however, lies beyond numbers: in the building of resilient, sustainable, and people-centric prosperity across the Indo-Pacific.ibef+3


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