India-South Korea FTA in final stage

Negotiations for a free trade agreement (FTA) between India and South Korea are in the final stages. Both countries have agreed on the modalities for goods, while those for the services sector are in the process of being finalised.

Sources close to the negotiations said both countries had broadly agreed on the percentage of goods which could be traded freely once the FTA is in place.

"South Korea will limit only 5 per cent of its tariff lines in the negative list, while India will retain 15 per cent," the sources said. There are over 5,000 tariff lines (products) in India that are traded with other countries.

South Korea is a major destination for Indian exports, especially petroleum products, gems and jewellery, cotton yarn and textile made-ups. Total exports to South Korea during 2006-07 increased by 38.21 per cent to $2.5 billion, from $1.82 billion in 2005-06.

Imports from South Korea during 2006-07 stood at $4.77 billion, which is a growth of 4.71 per cent over $4.56 billion in 2005-06.

The next step in the ongoing negotiations would focus on finalising the kind of goods which would be freely traded as well as those which would be put on the negative list (items which will see no tariff cuts).

However, talks on market access in the services sector are yet to make much headway. "India wants enhanced market access to the South Korean services sector, which till now the Koreans have not agreed to," the sources added.

However, observes feel that if the current pace of negotiations continue, talks could conclude by December this year. "On a macro level, most of these things have been agreed to.