New Delhi, India – 2026/04/20: South Korean President Lee Jae Myung held talks with Indian Prime Minister Narendra Modi at Hyderabad House, aiming to give a big boost to economic cooperation, especially in areas such as semiconductors, shipbuilding, AI, enhancing cooperation in defense and securing supply chains by nearly doubling bilateral trade to $50 billion by 2030. (Photo by Sondeep Shankar/Pacific Press/LightRocket via Getty Images)
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Trade uncertainty with the US and pressure to diversify away from China make India and South Korea natural partners – but their relationship has yet to translate from intention to meaningful implementation.
On Monday, Indian Prime Minister Narendra Modi and South Korean President Lee Jae Myung confirmed plans to increase bilateral trade to $50 billion by 2030, a target that is set to grow by 2030. First announced in 2018.
Modi said in a joint press statement that both the countries… Moving beyond “trusted partnerships” A “futurist” where areas of cooperation span “from chips to ships, talent to technology, and environment to energy.”
South Korean President Jae Myung, the first to visit India in eight years, said the two countries can “side with each other” in “an era of extreme uncertainty”.the most ideal partner “For comprehensive cooperation to promote mutual development and innovation.”
But despite big targets and talks, trade between the two countries continues increased at compound annual rate Of only 3% from 2018 to 2025. According to Indian Commerce Ministry data, in the fiscal year ending March 2025, total trade between India and Korea stood at $26.89 billion – a little more than half of the target set for 2030.
“I would just say that the unrealized potential is tremendous,” Ashok Malik, partner at public policy think tank The Asia Group, told CNBC. He said both countries are looking to diversify from the US market and explore sourcing options other than China.
Korea is a perfect fit for India as it offers advanced technologies in EV, electronics, semiconductors and AI. India wants to diversify its sourcing away from China in these sectors, Malik said, adding that shipbuilding and automotive steel are other areas of interest for India.
But experts including Malik said regulatory delays remain a major hurdle for South Korean companies wanting to invest in India.
practical challenges
Reema Bhattacharya, head of Asia research at Verisk Maplecroft, said the biggest concern is policy unpredictability, adding that land acquisition, infrastructure delays and regulatory complexity “remain practical operational challenges” for Korean companies investing in India.
Take the case of the Korean steel giant. POSCOWho Announced an investment of $ 12 billion in India about two decades ago. The project faced several delays, and POSCO abandoned it a few years ago. Difficulties in obtaining landAccording to a report by Reuters.
In 2024, POSCO renewed its plans to invest in India by setting up a steel plant capable of producing 6 million tonnes per year, this time in a joint venture with India. JSW Steel. After two years of planning, The project has secured land And will be operational by 2031.
Meanwhile, progress in shipbuilding has been slow. HD Korea Shipbuilding & Offshore Engineering announced in July last year Plan to locate shipbuilding operations With Indian state owned company Cochin Shipyard.
So far, there has been no formal commitment from either side regarding the scale of investment or setting up a joint venture. Shipbuilding has been the “driving passion of the Modi government since its early days” and is now showing some promise, Malik said, but it still has a long way to go.
South Korean businesses have been prominent in India since the 1990s, dominating some key sectors such as Hyundai India in automobiles, LG Electronics in consumer goods, and SAMSUNG In Electronics. Nevertheless, South Korea is only in second place 13th largest FDI investor According to India Brand Equity Foundation data, cumulative inflows into India from April 2000 to March 2025 were only $6.69 billion.
Comparatively, Singapore ranks second cumulative fdi flows of $174.89 billion, while the U.S. Is in third place with $70.65 billion.
Arpit Chaturvedi, Teneo’s South Asia consultant, pointed out that despite “huge strategic interest”, Korean M&A in India has remained relatively modest in recent years at around $200-$300 million annually. “This is a small part of Korea’s total outbound M&A,” he told CNBC in an email.
Meanwhile, in the last two years, Korean companies have successfully repatriated some of their initial investments in India. Hyundai India sold shares worth $3.3 billion through an IPO in 2024, while the listing of LG Electronics fetched $1.3 billion for the Korean major. Both of these IPOs were structured as offers for sale – a route that enables existing investors to sell shares.
