Indian government and the South Korean government have signed a new Free Trade Agreement. According to Seoul officials, the agreement will eliminate or reduce import duties on 85 per cent of South Korean exports and 90 per cent of India's overseas sales by 2019. It is expected to come into force early next year. Assocham has welcomed the new trade agreement which will improve the trade in areas of automobiles, heavy engineering, electronics, etc.
Since the trade agreement also emphasizes on auto exports, the reduced import duties and tariffs will make Korean products cheaper in India. This will include Hyundai cars. Hyundai largely imports its auto components from Korea for manufacturing its cars in India. Once the agreement is ratified by the Korean government early next year, it would mean that Hyundai auto components will see a huge slash in their prices which would in turn make Hyundai cars cheaper. Car parts accounted for 12.6% of Korea’s US$ 8.98 billion worth of exports to India last year.
The new agreement also means that not only Korea will have better access to 1.2 billion Indian customers but also new job market for Indian engineers in South Korea.