South Korea pledged $10 billion for infrastructure projects in India as the two nations signed seven agreements on the first day of Prime Minister Narendra Modi’s visit, focused on economic ties with Asia’s fourth-largest economy.
Both countries agreed on Monday to upgrade their ties to “special strategic partnership” and deepen defence cooperation after Modi and President Park Geun-hye discussed issues ranging from diplomacy and economy to international security.
“We have laid the foundation for a relationship that two major Asian countries with shared values should have,” said Modi, who arrived in Seoul on Monday morning from Mongolia.
The Prime Minister also held discussions on security and cooperation with UN Secretary General Ban Ki-moon, a South Korean national who is set to retire in 2016.
The deals came a day ahead of his scheduled meetings with business tycoons from South Korea’s largest conglomerates, called chaebols, which include 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.
South Korea’s ministry of 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, a statement said.
The $10-billion pledge was in line with Modi’s efforts to secure promises of bigger South Korean investments as part of his Make in India initiative. The funds will support infrastructure projects such as development of smart cities, railways and power generation.
“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.
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.
One of the deals signed on Monday was on avoidance of double taxation, a key step to forge closer economic relations.
The Prime Minister is scheduled to visit on Tuesday the main shipyard of the world’s largest shipbuilder, Hyundai Heavy Industries, in the southern city of Ulsan, as the South Korean mega-corporation is said to be keen on cooperating with Hindustan Shipyards to produce warships.