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Growing India-Korea Ties

India is an Asia-Pacific Power and is Bound to Increase its Engagement with the Region in the Near Future
Wednesday, March 7th, 2012
Prakash at reception

Mr. and Mrs. Vishnu Prakash at a welcome reception hosted in his honor at Lotte Hotel on February 13th, 2012. Also seen are Dr. Lakhvinder Singh, President of Indo-Korean Business and Policy Forum and his colleagues from the Forum who performed during the event.

The Asia-Pacific Business and Technology Report was able to meet with Vishnu Prakash, the new Ambassador of India to South Korea, in his residence in Seoul earlier this month. Mr. Prakash is a senior diplomat who was formerly the Official Spokesperson in the Ministry of External Affairs, New Delhi, for three and a half years before coming to this post. It is not his first time in Korea either. He last visited Seoul as part of Prime Minister Dr. Manmohan Singh’s delegation in November 2010 to attend the G20 summit. As the spokesperson he always travelled with the Prime Minister of India during the latter’s visits abroad. Mr. Prakash is uniquely suited for his current position, having served in Shanghai, Tokyo and Vladivostok, besides impressive stints in Moscow, New York, Islamabad and Cairo. He has decided to strongly focus on deepening bilateral economic and commercial ties which have been booming ever since the India-Korea Comprehensive Economic Partnership Agreement (CEPA) came into force on January 1st, 2010.

In a wide ranging interview with Asia-Pacific Business and Technology Report Managing Editor Dr. Lakhvinder Singh, he discussed his plans to further strengthen India-Korea ties and deepen India’s engagement with East Asia.

Welcome to Korea. Is this your first time in Korea? What is your first impression of Korea and the Korean people?

I had been in Korea earlier, for the G20 summit with the prime minister. On assignment, this is my first time. I have some knowledge of the region though, having served in Japan, China, and Vladivostok. I came with eyes wide open, in the sense that before coming here I was the official spokesperson of my foreign office for 3.5 years. And I have literally seen the relationship getting transformed from close quarters. I had some sense of what this position entailed, how the relationship is, what to expect. But I must say that what I have found here has gone beyond my expectations, in the sense of the clearly discernible warmth for India in Korea. My first impressions have been very positive.

There must be a lot of events that you have been invited to already. Any highlights?

I hit the ground running in the sense that in the last five weeks we’ve had a number of interesting engagements and a number of Indian cultural events. We organized a photographic exhibition, along with the Korea Foundation, on the travels in 1920s-30s of Nobel laureate Rabindranath Tagore, to southeast and east Asia. In 1929 he penned a poem on Korea called ‘Lamp of the East’, prophesying a great future for the nation. Korean people have great affection for Tagore. We also brought one of our renowned classical dancers, Ms Kavita Dwibedi, to perform Odissi, as part of the festival of India that has been going on for ten months. She performed in Seoul and Busan. We also had a Republic Day celebration on the 26th of January. I have met lots of people already from different walks of life, including presidents of newspapers and universities, heads of the commerce chambers, and political and business leaders. It has been a satisfying first month for me.

What do you think of India and Korea’s changing roles in the Asian region and their interplay?

Prakash and Obama

Mr. Vishnu Prakash with President Obama in New Delhi in November 2010.

We see India as a pacific power. We have been pursuing a Look East policy since 1992, to engage ASEAN and the East Asian nations. We are very happy with the response and the results. One, we already have an annual Indian ASEAN summit. We now have an India-ASEAN FTA in goods. Our relations with China, Japan, and South Korea are evolving very well. With respect to South Korea, I think the last few years have seen a transformation in relations. We are now strategic partners. We already have a CEPA and our relations in practically all spheres including culture, education, security, defense, and business are growing. I would like to particularly underscore a growing strategic convergence in interests and outlook between India and Korea. There are today no major issues which divide us. Besides, we also are two vibrant democracies. There are a number of factors which are bringing us closer. First and foremost we are both rapidly growing economies. India is seen as a huge a major market with a middle class of 300 million people and a 2 trillion dollar economy by the end of 2012. There are a variety of factors which are injecting momentum into this bilateral relationship.

India set up diplomatic relations in 1962 with North Korea. But recently in the last 3 years this relationship has also been picking up very fast. Direct and indirect trade between the two countries is estimated to have already reached $US 1 billion. India decided to give North Korea almost 1 million dollars of food aid, and the Indian administration has been giving North Korea a lot of other attention. In the free world, India may now be the only country that has a good relationship with both North Korea and South Korea. As a government representative, do you think this is a part of India’s policy to play a more constructive role in peace-building in the Korean peninsula, or is it a normal routine functioning relationship that we should not read too much into?

We have, as you have already noted, a long relationship with both Koreas. In North Korea, our embassy has been functioning for a long time. In the last few years at the request of North Korea and within our capabilities, we from time to time have provided food assistance. Last year also we did so at the request of the World Food Program. As for trade, it is a question of demand and supply. The government doesn’t have much of a role and these are purely commercial matters.

Today North Korea faces plenty of international sanctions and some countries have refused to give food as aid. But North Korea is surviving because of support from China. India’s petroleum industry is said to be the second largest supplier of petroleum products to North Korea. Even though you’ve already said these things are purely commercial and the government isn’t interfering, to what extent does this free hand given to Indian companies to deal with North Korea indicate change of Indian policy towards North Korea and the Korean peninsula?

India is a responsible member of the international comity of nations. We always adhere to international conventions that we are party to and UN decisions. So in regard to any determination made by the UN, we have always adhered to it in letter and spirit. India has always played a responsible and constructive role in international affairs. That being said, there is no governmental interference when it comes to business. We are a market economy. International trade is mostly conducted by the private sector. And they go by commercial considerations.

So, having a good relationship with North and South Korea, do you think India has a role to play in peace building and conflict resolution on the Korean peninsula? In the Korean War, India could foresee the importance of this region, and contributed immensely during the war and after the war in bringing peace to the peninsula. The founders of the Indian republic could also see the importance of this region. We lost this momentum during Cold War years. But now once again we have a good reputation in both countries. Do you think the time has come for India to return to its traditional role as a peacemaker?

prakash and hu jintao

Mr. Vishnu Prakash with President Hu of China.

It is very important to understand India’s outlook. We are not a country which is in the business of imposing its political system or way of life or philosophy - political, economic, or social - on any country. Secondly, if we have played a role anywhere outside our borders, that is only at the invitation of the country or countries concerned. Let me give an example: Afghanistan in 2001 sought India’s assistance in economic development and we have already become the sixth largest provider in the world of economic assistance to Afghanistan, of over $US 2 billion, and this is despite the fact that we are ourselves a developing country. Three, as far as the Korean peninsula is concerned, we have made it very clear that we would like to see a peaceful settlement of the Korean issue. We have always been a very powerful voice for peace and dialogue. We maintain that there is no dispute in the world that cannot be settled through peaceful negotiations. We do as we say. In our own neighborhood we have been a victim of terrorism emanating from Pakistan. Even then we have always been the initiator of dialogue with Pakistan because we believe that dialogue is the best way forward.

China is an important player on the global stage. How does India view China’s changing role in the Korean peninsula and in East Asia in general?

China is a very important player in Asia and beyond. China is our northern neighbor. We have a 4,000km border with them. We have been engaging China actively. We seek a cordial and cooperative relationship, When it comes to Asia, I think the 21st century is the Asian century. In the next 10 to 15 years India, China, Korea, Vietnam, and Japan are going to play an even bigger role. It would not be incorrect to say that the center of economic gravity is gradually shifting towards Asia, and our respective nations have concluded a strategic partnership. China is now our largest trading partner in goods. What role China plays in other regions and other countries is not for me to comment on, except to say we would all like to see the peaceful rise of China, as has often been averred by Chinese leaders.

What are the major areas of engagement of India with Northeast Asia?

We believe that we are an Asia-Pacific power. We have enjoyed a civilized relationship with East Asia and the Indochina region, including with Vietnam, Indonesia, Cambodia, Laos, and Thailand. Let me talk of Buddhism for a moment, which from India has travelled far and wide over 2,000 years, to southeast and northeast Asia. And whether you talk of China, Mongolia, Korea, or Japan, India has had historical linkages with them. In the recent period our relationship has evolved. We have economic, commercial, cultural, defense, security, people-to-people relationships with practically all North and East Asian regions which are growing rapidly.

Recently there has been a lot of talk about an Asian economic community. Your prime minister has been talking about this issue every now and then. How does India look at Asian economic integration?

The Prime Minister is a renowned economist. He walks tall on the international stage because of his stature as an economist and the father of India’s economic reforms. As a statesman his wise counsel is valued at international forums such as the G20 process. When it comes to Asia, I think the 21st century is the Asian century. In the next 10 to 15 years India, China, Korea, Vietnam, and Japan are going to play an even bigger role. It would not be incorrect to say that the center of economic gravity is gradually shifting towards Asia. Our Prime Minister has been a foremost proponent of the Asian economic community which would enhance mutual economic convergence and synergies.

Given that sentiment, there are some practical problems. Asia as an economic unit is not the same. Different countries are at different stages of economic development. The EU is possible because most countries are at the same level. Some countries like Japan and Korea have developed but there are some practical problems. How can we solve these practical problems?

terests. I’m happy that the East Asia Summit is evolving as an important forum. Now coming back to IndiaSouth Korea bilateral ties: what was your first feeling about the relationship when it was handed over to you and what were the important areas you decided you are going to focus on during your ambassadorship to take it further? The first impressions have been very positive. I have become fully conscious of what the relationship entails and completely subscribe to the vision of our relationship. We are strategic partners, we have a similarity of outlook and approach on a host of international, regional, and other issues. That is an important aspect of the relationship. One of the pillars of the relationship is economic and commercial cooperation. In the last few years billions of dollars of investments have flown in both directions. Our trade in 2011 has exceeded 20 billion dolNobody claims to be having a magic wand to create an Asian economic community tomorrow. There are enough historical examples of countries with different levels of economic development but with shared interests coming together. All 27 members of the EU are not at the same level of economic development. They are all democracies and have reached certain understandings, and that is the glue. Take the ASEAN region - they are at different levels of economic development. Singapore, say, which is a very developed country, and Laos, Cambodia, and Myanmar which are developing nations, are members of ASEAN. There are enough examples for this type of cooperation, so long as there is a political will. So long as countries appreciate there is an economic advantage, you gradually find ways to add synergies. What you require is far sight, political will, and a clear demonstration of economic advantages.

Recently India has become very active in East Asia. What is the future of the East Asia Summit as a whole?

I've already mentioned the historical role and the historical linkages between India and Southeast/East Asia. I've already mentioned that India is an Asia-Pacific power. It is very natural for India to be a member of the East Asia Summit. We have convergence of interests. Economic, commercial, security, energy. For example, sea lanes are all important for our countries. We are all very interested in safe passage and free navigation in the sea lanes of communication. Many countries are victims of terrorism and it is very important for us to join hands and root out the menace. When you talk of the East Asia Summit, all the members have similar economic, cultural, and security interests. I’m happy that the East Asia Summit is evolving as an important forum. Now coming back to IndiaSouth Korea bilateral ties: what was your first feeling about the relationship when it was handed over to you and what were the important areas you decided you are going to focus on during your ambassadorship to take it further? The first impressions have been very positive. I have become fully conscious of what the relationship entails and completely subscribe to the vision of our relationship. We are strategic partners, we have a similarity of outlook and approach on a host of international, regional, and other issues. That is an important aspect of the relationship. One of the pillars of the relationship is economic and commercial cooperation. In the last few years billions of dollars of investments have flown in both directions. Our trade in 2011 has exceeded 20 billion dollars for the first time. In 2014 we are confident of reaching the 30 billion dollar mark. We also have ongoing defense and security cooperation. We will have a defense wing of the embassy soon, later this year. Last year we set up a full-fledged Indian cultural center, recognizing great mutual interest in each other's cultural traditions. This year we are told Korea will set up a cultural center in Delhi. We are happy at the growing number of people-to-people contacts. Last year we issued close to 100,000 visas. We have been issuing 7 to 8 thousand every month. Half of the people from Korea who go to India are there for business, the other half for tourism. In short I am very happy at the speed and manner in which oure relationship is growing.

Two years ago the Comprehensive Economic Partnership Agreement (CEPA) was signed between India and Korea. How do you think it has fared so far? What is your personal take?

I think the CEPA has been a resounding success. I can substantiate it. In just two years during 2010 and 2011, trade increased 70 percent. Last year Mahindra and Mahindra invested around half a billion dollars in Ssangyong Motors. So you have investments flowing in and trade flowing in. During the last two years the CEPA model has been replicated by us with a number of countries in the region, including Japan and Malaysia, and we are now negotiating one with Indonesia. A joint committee at the level of trade ministers has been set up, to regularly review functioning of CEPA. The last meeting was held in January 2011. We have a trade deficit with Korea and have been in discussion with our Korean friends for better access for Indian IT companies, pharmaceuticals, agricultural products, etc.

There is a common perception among Indian businessmen that the CEPA has been more beneficial to Korean companies than Indian companies. They expected that Korea would open the service sector to Indian companies but it has not been true so far. What can be done so that India and Korea can narrow the current trade gap?

Korea is a technology powerhouse. We are importing manufactured goods like electronics, white goods, autos, components, and chemicals from Korea. Our strengths are in the services sector, such as biotechnology, IT and in the pharmaceutical sector. A majority of our exports to Korea are comprised of primary goods, though we export finished goods too. So we seek better market access in the services sector, for pharmaceuticals, and so on. I want to underscore here that these are discussions between friends. We both want to see the CEPA doing well.

How have Indian companies coming into Korea rated their initial experience? What kind of problems have they been facing? What do they need to make things better?

Indian companies in Korea are quite happy. TATA Motors, which bought Daewoo trucks, is doing very well. The IT companies I have already mentioned. They are doing well. They are looking at playing a more active role. Ssangyong Motors is a new venture, and Mahindra and Mahindra are trying to nurse it back to health. But the experience of the Indian companies has been positive. What I would like to mention is that the Indian private sector has come of age. We find that outbound investment from India every year is almost equal to inbound investment. Indian companies are increasing their footprint abroad. For instance, Indian companies have invested $US 26 billion in the US in the last 5 years.

So you’re giving the impression that everything is OK as far as economic ties are concerned between the two countries. Do you see any problem areas?

We have no major issues dividing us. There are normal commercial issues which are very normal and healthy between any two countries. And we are certainly keen to have a better access to the Korean market in some areas as are Korean companies in India. This is a normal thing between two trade partners. We are in discussion to make things better.

Korean companies are hiring a lot of Indian labor in IT and other things. But they do not provide the same benefits that they could otherwise get in the EU and other developed countries. So many Indian laborers have been complaining. I would like to draw your attention to the fact that there are some issues, especially between...

Is it India-specific? Since it is not a dispute between Korea and India, we cannot take it as an issue between two countries. This is about Korean law and is applicable to workers from all countries in Korea. As the Ambassador of India I would certainly like to see the Indian personnel and community to be comfortable, and we will do what we can.

Recently Korea has been emerging as a power house in Green Technology and sustainable development. What are the potential areas of cooperation in green energy and nuclear energy between the two countries?

We are a developing country. While we will be a two trillion dollar economy this year, for us a healthy sustainable economic growth is of paramount importance, which is the main focus of India’s domestic and foreign policy. Having said that, it is also very important to grow responsibly and to try to enhance energy efficiency, to reduce carbon emissions. We have already undertaken voluntarily to enhance India’s energy efficiency by 20 percent by 2020. We are doing good work in renewable energy, wind, solar, biofuel, etc. One of the reasons for our quest for nuclear energy is precisely that nuclear energy is a clean energy. And we would like to enhance nuclear energy component in the mix of our energy basket. Today just 2 percent of our energy comes from nuclear power. We want to enhance that to 10 percent by 2035. So, we have plans to add about 60,000 megawatts of nuclear power generation capacity in the next 20 years. As you know we have already concluded a nuclear cooperation agreement with Korea, and we think they can play a positive role. We are also happy to collaborate with Korea in green technology and other areas.

Education is very important. Both from a short-term perspective and long-term perspective. The number of Korean students studying in the US is declining. China has been a great beneficiary of this shift. Is there any strategy in place to get some of this emerging student shift to India? How can education sector cooperation with Korea can be improved?

Sixty years ago, Prime Minister Nehru went about building ‘new temples’ in independent India in a series of Indian institutes of Technology, Management and Science. We have done quite well in the education sector. I’m happy that more and more Korean students are going to India to study English, IT, management, and Indian students are coming here to study sciences, do PhDs, Masters, and to study Korean. This trend has to be strengthened. We intend to be more active, in having cooperative arrangements between Korean and Indian Universities. I’ve just returned from Busan where I had excellent meetings with the Presidents of Pusan National University, Shilla University, and the Busan University of Foreign Studies. I will be doing the same thing here in Seoul in the next few weeks. We will be focusing very strongly in this sector.

Once again thanks for talking to us.

Thanks. It is a pleasure and I look forward to more such chats.

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