SEOUL - South Korea and India agreed on Monday to step up defence cooperation while South Korea pledged $10 billion in finance for infrastructure projects as Indian Prime Minister Narendra Modi arrived for a visit.
South Korea’s Ministry of Strategy and Finance and the Export-Import Bank of Korea will create a $1 billion Economic Development Cooperation Fund and provide $9 billion in export credits to India, the two countries said in a statement.
Modi signed the deal with South Korean President Park Geun-hye at the beginning of a two-day visit to Seoul.
Seven out of 10 points in the joint statement were focused on defence cooperation including exchanges between South Korean and Indian shipyards, and their navies.
“I have requested President Park to support the participation of Korean companies in the defence sector in India. Her response has been positive,” Modi said in remarks at a joint news briefing with the South Korean president.
Modi arrived from Mongolia and earlier visited China on a three-country Asian tour aimed at building economic ties.
Modi has been active diplomatically since taking office a year ago, and has made a point of forging closer relations with countries on China’s periphery - a move seen by some observers as a response to China’s own strategic relations with India’s neighbours.
Following talks with President Park Geun-Hye, Modi told a joint press briefing that the two leaders had agreed their “modest” bilateral trade was falling far short of its potential.
Modi, who took office a year ago, said his visit to South Korea came at a time of renewed momentum in the Indian economy as his government pursues a comprehensive modernisation programme.
“We have a special focus on infrastructure and developing a world class manufacturing sector. Korea can be a leading partner in this enterprise,” he said.
His trip - part of a six-day East Asia tour - is packed with a whirlwind of meetings with business tycoons from South Korea’s largest conglomerates, including Hyundai, Samsung and LG.
All three manufacturing giants operate plants in India where they enjoy sizeable shares of the vast consumer market for cars, smartphones and home appliances.
“Korean companies have the edge to succeed in India,” Modi said, who stressed the opportunities being created by his “Make in India” initiative aimed at boosting the nation’s relatively weak manufacturing sector.
Hyundai Motor Company, South Korea’s largest carmaker, operates two plants in the southern Indian city of Chennai, and expanding that investment is expected to be high on the agenda during a meeting between Modi and Hyundai Motor chairman Chung Mong-Koo on Tuesday.
A planned meeting with J.K. Shin - the head of Samsung’s mobile unit -is also expected to help accelerate the South Korean firm’s reported plans to build a third plant in India, one of the world’s fastest-growing handset markets.
And Modi is scheduled to visit the main shipyard of the world’s largest shipbuilder, Hyundai Heavy Industries, in the southern city of Ulsan to meet with its chairman Choi Kil-Seon.
India also needs help upgrading its outdated transport infrastructure - a constant source of frustration among foreign firms operating there.
South Korea’s Finance Ministry and the Export-Import Bank of Korea said Monday they intended to provide $10 billion dollars in loans and funding for Indian infrastructure projects including railways and power generation.
“We have laid the foundation for a relationship that two major Asian countries with shared values should have,” Modi said.