South Korea, with which India has trade deficit of over USD 8 billion, has sought widening of the scope of free trade agreement by including more products under the pact.
The issue came up for discussion during a meeting of Indian and Korean officials in Seoul last month.
The talks over widening of free trade agreement are likely to figure during Commerce and Industry Minister Nirmala Sitharaman’s visit to South Korea in the second week of May.
Prime Minister Narendra Modi is also expected to visit the country later next month.
The Korean side wants that the comprehensive economic partnership agreement (CEPA) with India should be upgraded to include some more products such as machinery and certain kinds of steel products, an official told PTI.
India and South Korea implemented the CEPA in January 2010. The bilateral trade is in favour of South Korea. Trade deficit increased from USD 5.1 billion in 2009-10 to USD 8.27 billion in 2013-14.
During the official level meeting, the Indian side raised concerns over declining exports of products, including textiles, gems and jewellery and pharmaceuticals to South Korea.
Upgrading of a free trade pact involves reopening of the agreement and fresh negotiations with regard to duty-free access of the new products.
Re-opening of the pact can only be taken up after the Union Cabinet’s nod. Therefore, Commerce Ministry is expected to soon approach the Cabinet for the approval.
However, exporters’ body FIEO has called for exercising caution before re-opening of the trade pact with Korea.
“Indian side needs to carefully look at what they are getting in return. In re-opening of the pact, one has to be little careful about steel sector. The industry is already feeling the pinch of declining global prices,” Federation of Indian Exports Organisations (FIEO) Director General Ajay Sahai said.
According to another expert, free trade agreements with Japan and South Korea have already resulted in cheaper imports of steel and has not impacted the domestic production.