Piyush Goyal Calls Existing Pact ‘Irrational and Lopsided’; Both Sides Agree to Address $15.35 Billion Deficit Through Balanced Framework and New Areas of Cooperation
New Delhi/Seoul: India and South Korea have agreed to work together to address the widening bilateral trade deficit during the latest round of talks to upgrade their Comprehensive Economic Partnership Agreement (CEPA). The 12th round of negotiations concluded with both sides acknowledging the need for a more balanced trade relationship.
Commerce and Industry Minister Piyush Goyal described the existing CEPA, which came into force in 2010, as “irrational” and “lopsided,” noting that it has failed to deliver equitable benefits to India. The trade deficit has steadily grown, reaching USD 15.35 billion in 2025-26, up from USD 15.2 billion the previous year.
Key Outcomes of the Talks
During the discussions, both countries agreed to:
- Review tariff structures and non-tariff barriers to create a more level playing field
- Expand cooperation in new areas such as digital trade, supply chain resilience, and critical technologies
- Work towards increasing Indian exports to South Korea in sectors like pharmaceuticals, agriculture, textiles, and engineering goods
- Explore opportunities in electric vehicles, semiconductors, and green energy
Goyal emphasised that any upgraded agreement must deliver tangible benefits to Indian industry and farmers while maintaining the strategic partnership between the two nations.
Background of India-South Korea CEPA
The India-Korea CEPA was signed in 2009 and implemented in January 2010. While it boosted overall trade, India has consistently run a large deficit, primarily due to high imports of electronics, machinery, and automobiles from South Korea. Indian exports, particularly in agriculture and labour-intensive sectors, have not grown at the desired pace.
The current upgrade talks aim to correct this imbalance through a modernised agreement that reflects the economic realities of both countries in 2026.
Positive Signals for Future Cooperation
Despite the frank assessment of the existing pact, both sides expressed optimism about the future of the relationship. South Korea remains an important partner for India in technology and manufacturing. Indian companies are keen to increase their presence in the Korean market, while Korean firms continue to invest in India’s automobile, electronics, and infrastructure sectors.
The two countries have also set an ambitious target of taking bilateral trade to USD 50 billion by 2030, with a stronger focus on value-added exports from India.
What Lies Ahead
The next round of CEPA upgrade negotiations is expected to be held later this year. Both governments have directed their officials to work intensively on resolving outstanding issues. Industry bodies on both sides have welcomed the renewed focus on addressing the trade imbalance.
Analysts believe that a well-negotiated upgrade could significantly boost Indian exports while giving South Korean companies better access to India’s growing market. The talks are also seen as part of India’s broader strategy to diversify trade partnerships and reduce over-dependence on any single market.
