India and South Korea agree to speed up trade pact upgrade to fix growing deficit

India and South Korea have agreed to speed up talks to update their bilateral trade pact while acknowledging concerns over New Delhi’s widening trade deficit with Seoul, according to an official statement issued after the latest round of talks held in New Delhi.

The 12th round of negotiations to modernize the India-Korea Comprehensive Economic Partnership Agreement (CEPA) concluded on Wednesday, with both sides reaffirming their commitment to conclude negotiations in a “time-bound manner” and build a more balanced trade partnership.

The three-day talks, held from May 25 to 27, follow an agreement reached in April between Union Commerce and Industry Minister Piyush Goyal and Korean Commerce Minister Yeo Han-koo during the South Korean president’s state visit to India to speed up CEPA review.

India and South Korea signed CEPA in 2009 and implemented it from January 2010 to promote bilateral trade and investment. However, Indian officials have increasingly expressed concerns about a growing trade imbalance in favor of South Korea, particularly in sectors such as electronics, engineering and petrochemicals.

“Both sides recognized India’s bilateral trade deficit, which has increased significantly since the entry into force of IC CEPA in 2010, and agreed to address this issue within the overall framework of IC CEPA,” the commerce ministry said.

The latest negotiations covered trade in goods, trade in services, investment, sanitary and phytosanitary standards, rules of origin and procedures of origin.

Greater market access

People with knowledge of the discussions said India was seeking greater market access for labor-intensive industries and service exports, while pushing for stricter rules of origin to prevent abuse of tariff concessions through third countries. South Korea is believed to be seeking better investment protection and greater policy predictability for Korean firms operating in India.

The two countries also agreed to create sub-groups to expand discussions into newer areas such as digital trade, supply chain cooperation and strategic industrial cooperation, signaling efforts to expand the agreement’s scope beyond conventional customs issues.

The move is significant as India seeks to strengthen supply chain resilience and deepen industrial partnerships amid global geopolitical uncertainty and multinational companies’ efforts to diversify manufacturing bases.

South Korea remains one of India’s key economic partners in East Asia, as Korean companies have a strong presence in automobile, electronics and mobile phone manufacturing.

The talks are in line with the broader vision of a ‘futuristic partnership’ outlined by Prime Minister Narendra Modi and South Korean President Lee Jae-myung during recent bilateral engagements,” the commerce ministry said in a statement.

Officials said more rounds of talks are expected in the coming months as the two countries work to finalize a modernized CEPA aimed at correcting trade imbalances while promoting investment and economic cooperation.