The ongoing political turmoil in South Korea is not expected to immediately affect trade with India, as the situation remains uncertain. South Korea is India's 11th largest trade partner, and while both exporters and importers acknowledge the unfolding crisis, it is too soon to determine its potential impact on trade.

In the first half of the current financial year, India exported goods worth $2.87 billion to South Korea, while imports from the country totalled $10.62 billion. Ajay Srivastava, former trade ministry official and founder of GTRI, stated that South Korea's leadership in technology and high-tech manufacturing positions it to withstand internal political challenges without disrupting trade. "Economies built on industrial strength and innovation can effectively separate politics from trade," Srivastava explained.

Strategic Importance of Trade b/w India and South Korea

The strategic importance of trade between countries lies in its ability to foster economic growth, enhance geopolitical alliances, and strengthen industries. For example, South Korea's advanced technology, particularly in electronics and semiconductors, complements India's growing market and manufacturing capabilities, creating opportunities for innovation and industrial development. India exports goods like pharmaceuticals and textiles to South Korea while importing high-tech products, benefiting both economies.

Additionally, trade partnerships like the India-South Korea Free Trade Agreement promote economic resilience and diversify supply chains, reducing dependency on any one country. These partnerships also contribute to geopolitical stability, as seen in collaborations in sectors like renewable energy.

Impact on Future Investments

• Hesitation Among Investors: Political instability may lead to hesitation from foreign investors who seek stable environments for long-term investments.
• Delayed or Reconsidered Projects: Businesses might delay or rethink large-scale projects due to uncertainties around policy changes or potential disruptions caused by political turmoil.
• Short-Term Risk Management: Investors might focus on minimizing short-term risks, potentially avoiding industries highly affected by political instability.

The economic impact of this crisis is significant. Investors are worried about the political instability, which has led to market fluctuations. Businesses are also concerned about the potential long-term effects on trade and investment.

What lies ahead for both the countries?

Despite the political challenges, the strong foundation of trade between India and South Korea, supported by sectors like technology, manufacturing, and clean energy, will likely ensure continued economic cooperation in the long run. Both countries have strategic interests that can transcend short-term political disruptions. As the situation in South Korea evolves, stakeholders in both nations will closely monitor the developments.