India and South Korea have shared a diplomatic relationship for over five decades and are celebrating their 50th anniversary this year. Over time, their engagement has evolved into a strategic partnership. The two nations have recognized the need to deepen their collaboration and diversify their engagement in various sectors.
Lately China’s rise as a global economic and political player has been emerging as a factor in India-Korea economic partnership. China’s economic engagement with Northeast Asian countries has grown significantly over the past few decades. China is now the largest trading partner of countries like South Korea and Japan. Its manufacturing prowess and competitive pricing have made it an attractive destination for supply chains and investments in the region. For India, this can be both a challenge and an opportunity to increase its influence in the region.
CHALLENGES and OPPORTUNITIES
China’s increasing economic engagement in the region is leading to competition for vital resources and markets. India and South Korea are already finding themselves competing with China for access to resources, trade routes, and investment opportunities, which can potentially lead to resource scarcity and higher costs.
China’s Belt and Road Initiative (BRI) involves significant infrastructure development in Northeast Asia, providing attractive alternatives to Indian and Korean projects. This competition in infrastructure development can be challenging, as China often has more significant financial resources and construction capabilities.
Geopolitical tensions, such as those related to the South China Sea dispute, North Korea’s nuclear program, and territorial disputes with Japan can create uncertainties and potentially disrupt economic cooperation. India and Korea must navigate these geopolitical complexities carefully together, especially when their economic partnerships intersect with China.
China’s advancements in technology and innovation may pose challenges to India and Korea’s tech industries. Competing with Chinese tech giants in global markets can be demanding, requiring significant investments in research and development and joint strategy for India-Korea.
China’s market is vast and has its own set of challenges, including regulatory complexities and intellectual property concerns. Navigating this market can be difficult for both India and Korea, especially when competing with local Chinese companies. The yuan’s fluctuations can impact the competitiveness of Indian and Korean exports to China and the stability of their investments in the country. Managing currency risk becomes essential for both India and Korea. They need to urgently set up a joint institutional framework to mitigate these risks.
While these challenges are significant, they also provide opportunities for India and South Korea to strategize and strengthen their cooperation and emerge as a beacon of hope for other smaller regional countries to build a rich, prosperous and rule based regional order and to evolve a combined strategy to face an increasingly aggressive China.
To counter the growing economic influence of China, India and Korea can diversify their economic partnerships beyond traditional areas of trade and investments. It is time both countries seek to strengthen bilateral ties and explore new markets beyond China together. India’s “Act East Policy” and South Korea’s “New Southern Policy” are aligned in their focus on infrastructure development in Southeast Asia. Collaboration on infrastructure projects in the region can be mutually beneficial. India and Korea can collaborate on technology and innovation to enhance their competitiveness in global markets. Joint ventures, research and development partnerships, and knowledge sharing can foster technological advancements to counter China growing prowess in this area.
Both India and South Korea need to work on updating Comprehensive Economic Partnership Agreement (CEPA) that facilitate trade and investment, reducing barriers and promoting economic cooperation as soon as possible. Encouraging Indian and Korean companies to invest in each other’s countries should be the first priorities of both governments. Further India and Korea should join hands and encourage other like-minded countries in the region to come together to counterbalance China’s influence through broader regional economic partnerships and cooperation and joint defence policies with highly collaborated region-wide defense strategies.
DEEPENING STRATEGIC PARTNERSHIP
China’s deepened economic ties with South Korea, force India in competition in sectors where it seeks to expand its influence in the region. Overcoming this challenge requires India to develop its export capabilities and improve the ease of doing business. India should leverage its strong strategic ties with Korea to enhance trade relations further, with a focus on diversifying the goods and services exchanged. India’s focus on manufacturing and South Korea’s advanced technology can foster innovation and trade growth.
India’s historical reluctance to enter into formal military alliances is limiting the extent of security cooperation with Korea. India’s current multi-aligned stance has at times complicated its ability to align with countries like South Korea on sensitive geopolitical issues. The changing geopolitical dynamics in Northeast Asia provide India with opportunities to cooperate on regional security and stability with Korea. Both nations have an interest in maintaining a balance of power in the region. Their strategic cooperation can help address common concerns and help build a new regional order based on rule of law and mutual respect of sovereignty of each country.
China’s massive infrastructure investments in Northeast Asia could potentially overshadow South Korea’s contributions in the region. India should help South Korea to ensure its projects have a significant impact on the region’s development and shaping defense and strategic environment in the region. The Indian side should come forward and support South Korean investments in its ambitious infrastructure development initiatives in the region to balance China’s growing economic influence in the region.
As China gains more influence in countries surrounding India and South Korea, the task of balancing this influence becomes more challenging. Regional countries may find it difficult to navigate between the two giants. India’s “Act East Policy” and South Korea’s “New Southern Policy” align in their focus on engaging with ASEAN countries. Crafting joint cooperation strategy with ASEAN, which can help balance China’s influence in the region, should be top priorities of both governments.
BUILDING NEW STRONGER STRATEGIC INSTITUTIONS IN SEOUL
In recent years, we have witnessed a significant transformation in the economic dynamics of this region, primarily driven by China’s assertive and strategic use of trade and investment as tools for expanding its influence. This deliberate weaponization of economic resources presents a compelling case for India to reassess and adapt its approach to the region. In these changed circumstances there is an urgent need to build new effective and comprehensive economic institutions in Seoul to protect and promote India’s core economic and strategic interests. While Indian Chamber of Commerce in Korea (ICCK) may have served its purpose in the past, the changing dynamics of the region necessitate the establishment of a new and comprehensive economic body in Seoul as China weaponize its trade and investment policies in the region. As the geopolitical and economic landscape of Northeast Asia evolves, we must proactively position India as a key player in the region. A new comprehensive economic body is needed to better align our economic interests with our strategic objectives and foster collaboration in areas of mutual interest, such as technology, manufacturing, and innovation than just focusing on traditional areas of economic cooperation such as trade and investments.
The current ICCK structure may not be equipped to address our emerging strategic needs and economic challenges effectively. A new entity will have the flexibility to adapt to changing circumstances and seize new opportunities. We must pro-actively engage with Korean businesses, government bodies, and other stakeholders to bolster trade and investment relations. A reimagined economic body can serve as a vital catalyst for such engagements.
South Korea has extensive economic ties with China. Korean economic dependence on the Chinese market for exports and investments is making it already challenging for Korea to balance its relationship with China and India. Domestically growing social problems and slowing economy are already weakening Seoul’s ability to take a firm stand against China’s increasing influence inside South Korea. Thus, India needs to come forward with a comprehensive economic and political package to empower South Korea to withstand Chinese pressure and blackmailing’s in domestic and foreign policy domains.
It is high time Indian political and diplomatic leadership understand and take home the strategic consequences of power shift in Korean peninsula and the region at large. Given the extent of economic power shift in the region, the time to craft a new Indian policy approach to engage Korea and the region at large more intensively is today. Tomorrow may be too late.
Source : TheSundayGuardian