BackSouth Korea pitches for business-friendly environment in India
Former PM Han Duck-Soo says South Korean businesses are raising difficulties with land acquisition, long procedures involved in getting licences
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New Delhi: Days after India removed barriers that delayed South Korean steel maker Posco’s Indian arm from setting up a $12 billion steel plant, business leaders from South Korea said delays in land acquisition and the lack of infrastructure were impeding a deepening of commercial ties between Asia’s third- and fourth-largest economies.
“We hope for a business-friendly environment in India," said Han Duck-Soo, a former prime minister of South Korea who is currently leading a Korea International Trade Association delegation.
“(South Korean) businesses are raising the difficulties with land acquisition, long procedures involved in getting licences," Han said—a fact borne out by the eight years that Posco India had to wait before it received the necessary clearances to set up an 8 million tonne annual capacity plant.
The proposed plant is two-thirds of its original proposed capacity of 12 million tonnes. Plans had to be curtailed after Odisha state said it had managed to acquire 2,700 acres of land for the plant as opposed to the 4,000 acres required for the plant, according to a senior Posco official.
Indian trade minister Anand Sharma told reporters that more than 1,700 acres of the acquired land had already been handed over to Posco.
Billed as India’s largest foreign direct investment (FDI), Posco’s plan to build a steel plant in Odisha had waited almost two years for the sign-off after the nation’s pollution watchdog suspended approvals in 2012. But on 6 January, the environment ministry revalidated environmental approval for the project.
The development came just weeks before South Korea’s president Park Geun-Hye’s four-day visit to India beginning on Wednesday.
Han, speaking on the sidelines of a meeting organised by the Federation of Indian Chambers of Commerce and Industry (Ficci), said South Korean companies were very keen to invest in infrastructure and manufacturing in India—two areas where the government of India is keen to attract investment.
India and South Korea are looking to sign a framework for cooperation in the road sector, according to a road ministry official, who did not wish to be named.
“The framework will then go for cabinet’s approval. We need technology and investment from their side. We are looking for an exchange of ideas and are keen on intelligent transport systems. South Korea has indicated its interest in this collaboration and interactions with them are ongoing," the Indian official said.
That Park has chosen India as her first overseas destination in 2014 indicates that “President Park thinks India is an important trade partner and an important partner in the global community. She has put a lot of priority on India," Han said.
Bilateral trade is currently about $17-19 billion with both countries implementing a Comprehensive Economic Partnership agreement in 2010. South Korean companies have invested $3 billion in India while Indian firms have invested $1 billion in Asia’s fourth-largest economy.
But some statistics compiled by the Associated Chambers of Commerce and Industry (Assocham) quoting Korea’s Exim Bank shows that Korean investments in India amounted to just 1.25% of its overseas investments amounting to more than $210 billion.
“In comparison, the Korean companies have pumped in $39.67 billion in China, $14.18 billion in Hong Kong, $8.38 billion in Vietnam, $6.73 billion in Indonesia and $4.65 billion in Singapore, $3.95 billion in Malaysia and $3.81 billion in Japan," Assocham said in a press statement.
“Excessive red tapism, poor infrastructure, complex tax policies, protectionist labour laws, high licencing and inspection costs, congested judicial system and land acquisition problems are major bottlenecks “ forcing South Korean investors to opt for other Asian countries, it said.
The Indian government is looking at $1 trillion of investments in ports, railways, roads and other infrastructure projects while it hopes that foreign investment in manufacturing will boost employment in India According to Han, President Park is expected to seek cooperation in the nuclear power sector given South Korea’s expertise in setting up atomic power plants and India being energy-deficient.
“I think that is a very high priority project for President Park..because Korea has a long experience of commercial operations of electricity power plants and India is energy deficient so there is a wide scope for cooperation," Han said.
Nuclear power was identified as a new area for cooperation during a visit to South Korea by Prime Minister Manmohan Singh in March 2012. South Korea had at the time asked India to identify two sites to set up nuclear power plants, but an Indian official this week said India would first consolidate existing projects for nuclear power generation before looking at newer ones.
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