South Korea has pledged to provide US$10 billion (S$13.2 billion) in funding for infrastructure projects, including railways and power plants, in India, in a sign of its eagerness to deepen economic ties with the regional power, during Indian Prime Minister Narendra Modi's visit.
To boost bilateral trade, the two countries also agreed to begin negotiations to update their existing Comprehensive Economic Partnership Agreement by June next year, according to a joint statement issued after Mr Modi met South Korean President Park Geun Hye yesterday.
This is Mr Modi's first visit to South Korea since taking office a year ago, and the last leg of his Asian tour aimed at boosting foreign investments. He had earlier visited China and Mongolia.
Speaking at a joint press briefing in Seoul yesterday, Mr Modi urged Korean companies to ride on opportunities created by his "Make in India" initiative, aimed at bolstering his country's weak manufacturing sector.
"Korea can be a leading partner in this enterprise," he said.
The two sides also signed seven bilateral deals and agreed to forge a strategic partnership, with greater co-operation in defence technology, defence equipment making and cyber security
In an interview earlier with Chosun Ilbo, Mr Modi described South Korea as an "inspiration" for India's development. He was especially impressed with how the country pulled itself out of the destruction wrought by the Korean War to achieve a progressive democracy and vibrant economy.
Mr Modi, who has been aggressively courting foreign investments since leading the Bharatiya Janata Party to a landslide victory last May on the promise of economic revival, appears interested in tapping South Korea's shipbuilding and electronics capabilities, according to local media.
His two-day visit is packed with meetings with some of South Korea's biggest conglomerates, including Hyundai Motor and Samsung's mobile phone unit.
He is also set to visit the Hyundai Heavy Industries' main shipyard in the southern city of Ulsan today and deliver the opening address at the 6th Asian Leadership Conference in Seoul.
Bilateral trade between India and South Korea amounted to US$18.1 billion last year - down from US$20 billion in 2011.
Dr Cho Choong Jae of the Korea Institute for International Economic Policy hopes the South Korean government's lead in providing funding to India would pave the way for more co-operation in the private sector.
Mr Modi's meeting with Samsung, for one thing, is expected to nudge the mobile phone maker towards its reported plan of building a third plant in India.
Meanwhile, an industrial complex solely for South Korean firms is being built in the north-western state of Rajasthan, to boost manufacturing co-operation.
Overseas markets, especially fast-growing emerging countries like India and China, are essential to South Korea, said Dr Cho.
"Korea has a small economy and we cannot survive without overseas markets," he told The Straits Times. "India is kind of like another China to us." China is South Korea's largest trading partner while India ranks 15th.
He said India-Korea ties have improved since Mr Modi took office, adding that greater co-operation with India will contribute to South Korea's economic revival.
This article was first published on May 19, 2015.
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