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Rediff.com  » Business » Posco case no deterrent to Korean investments

Posco case no deterrent to Korean investments

By V S Chandrasekar
November 11, 2010 14:08 IST
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PoscoEnvironment hurdles in the global steel giant Posco's $12 billion project notwithstanding, there are no no fears in South Korea about future investments in India and the issue is unlikely to figure during Prime Minister Manmohan Singh's visit in Seoul for the G-20 Summit.

Sources said the South Korean government and the POSCO management understand there are issues of clearances in India and that the government of India and the Orissa state state government are engaged in sorting it out.

"The full committment of the Republic of Korea is there. Government of India and government of Orissa is involved in sorting out problems.

It is unlikely to figure in any of the discussions here," the sources told journalists in Seoul.

Posco signed a memorandum of understanding with the government of Orissa in June 2005, to set up a 12 MTPA green field steel plant near Paradip, Jagatsinghpur District, Orissa, with an estimated investment of $12 billion.

The sources dismissed any sense of fear among the South Korean government or the companies, many of whom are doing very well in India.

They are earning a lot of profits and are looking at more and more projects.

Despite Posco, Korean corporations like Samsung are looking at more investment in India.

Samsung is setting up one more assembly line in Chennai, the sources said adding that the Hyundai model was very much alive in the companies in Seoul.

Hyundai has an automobile facility near Chennai in which over 300,000 cars are made for use domestically in India and over 2.5 lakh for use in third countries.

Posco is 'complex' with need for the land fixed at 4,000 acres where there is a problem of environmental clearances, the sources said.

On the growing economic ties, they said the Comprehensive Economic Partnership Agreement between India and South Korea has opened the door for large number of Indian professionals, especially from the Information Technology sector, to come in.

With English knowledge having a premium, hundreds of IT professionals are already here and the market has just started to open up for English teachers.

Earlier, the South Koreans preferred teachers from native-English speaking countries but the first recruitment of an English teacher from India has been made and more are in the offing.

Indian Ambassador to South Korea Skand Tayal said bilateral relations both on political and economic sides have been on the upswing for quite some time.

South Korea and India have entered into a strategic partnership besides signing of Free Trade Agreement and CEPA.

Bilateral trade between the two countries is estimated at $17 billion this year, registering a 55 to 60 per cent growth in the last eight months.

Trade balance is in favour of South Korea with exports from that country to India put at $10 billion as against $7 billion exports from India.

India is trying to perk up exports in IT and petro-chemicals in South Korea.

Korean companies have already undertaken $2 billion investments in India and are keenly looking at the Indian infrastructure sector.

The South Korean companies have a good track record in executing projects and that too at competitive rates.

They are also supplying turbines for the power sector and rolling stock for the Delhi metro.

On the Indian side, Tayal said, Tatas have invested more than $100 million in taking control of part of Daewoo motors after the latter got into problems.

Birlas, he said have invested $400 million in aluminium project and Mahindra's was planning investments of about $400 to 500 million in Ssangyong Motors.

On the political side, Ambassador Tayal said there was a healthy relationship between the two countries.

President Lee Myung Bak was the chief guest at the Republic Day celebrations in Delhi this year and there have been visits by External Affairs Minister S M Krishna and Defence Minister A K Antony this year.

Korean has been included as a language for Indian Foreign Service probationers with one of them already posted here.

India and South Korea have a Strategic Dialogue and Foreign Policy dialogue.

There is coordination between the defence forces in the Gulf of Aden in tackling pirates. Research and Design collaborations in new projects and systems are on the anvil between DRDO and its South Korean counterparts.

Sources said the civil nuclear agreement between the two countries was also under negotiations.

The text is ready and last-minute haggling over legal requirements is on. "It is a question of time.

"The South Korean nuclear producers are competitive and it will be good for India, though they are not (not) strong in the area of fuel."

South Korean nuclear companies are keen on doing business with India, the sources added.

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V S Chandrasekar in Seoul
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