Bilateral Cooperation in IT and IT-enabled Services between India and Korea in the Post-CEPA Era : Potential and Challenges

Bilateral economic relations between India and Korea seem to have improved considerably after the Comprehensive Economic Partnership Agreement (CEPA) between the two countries came into force in January 2010. This was reflected in a dramatic rise in India’s bilateral trade with Korea from US$ 3.4 billion and US$ 8.6 billion in 2009 to USS$ 4.4 billion and 13.1 billion in 2011 for exports and imports, respectively. In addition, the Agreement has created possibilities for higher trade in several product lines and services, and created scope for foreign direct investments (FDI) in both economies. FDI by Korea in India has almost doubled in the four-year period from US$ 68 million in 2007 to US$ 132 million in 2011. Likewise, Indian firms are increasingly becoming active by investing in diversified sectors of the Korean economy. While the early harvest gains from this expanded market access is more visible in merchandise trade, the future of trade in services between the two economies appears to be more promising. In particular, the information technology sector provides ample scope for enhancing two-way trade especially in the areas of software, Business Process Outsourcing (BPO) and other IT-enabled services (iTeS)