SMEs will drive next wave of India-Korea bilateral investment: Citibank Korea CEO

A month ago, the India-Korea Technology Exchange Centre in New Delhi and a new Samsung mobile factory in Noida were set up seeking to boost Indo-Korean ties in the MSME sector and create more jobs and business opportunities.

An MoU was also signed between National Small Industries Corporation (NSIC) from the Indian side and Small and Medium Business Corporation (SMB) from South Korea.

Now, Citibank Korea CEO Jin-Hei Park has acknowledged that the bilateral trade between India and South Korea is presently below its potential, and that the next wave of investment will be driven by small businesses, PTI reports.

In 2017, bilateral trade between the two countries totalled $20 billion, with investments showing an upward trend. Both sides have pledged to increase it to $50 billion by 2030.

"Large corporates have significant resources to invest quickly and penetrate any market. The challenge is to ensure that these large investments attract SMEs from both sides to also participate in the growth cycle. The ripple effect needs to cascade down where SMEs from Korea collaborate with medium-size enterprises from India on a great idea," said Park.

“We are aware that there lie immense opportunities for cooperation in the MSME sector between India and Korea. The small and medium business units from both countries can learn a lot from each other,” Indian MSME Minister Giriraj Singh had said last month.

Highlighting the importance, Park said that half of the delegation that accompanied South Korean President Moon Jae-in last month to India were medium-size enterprises from Korea looking to evaluate independent opportunities and not only just be a part of the supply-chain distribution for large companies.

"The key to a flourishing Korea-India trade corridor is to ensure greater people and resource connectivity amongst SMEs. This will move the partnership to the next level. It's not limited to large corporations," he said.

To facilitate investment, Citi has already opened a Korea business desk. It provides services such as trade finance, corporate loans, cash management, and investment banking.

He expressed hope that the trade flows between Korea and India will be driven by large corporates setting up facilities across both markets primarily in the automotive and electronics sector. "While Samsung and Hyundai will set up manufacturing facilities in India, Mahindra and Tata would do so in Korea. These large corporations will then bring their supply-chain partners to support their growth needs. So, Hyundai and Kia will ensure that their ancillary partners also set up facilities along with them as part of the supply-chain process," he said.

Citing the example of Kia Motors, Park said that the company is investing around $1.2 billion, but the total FDI inflow will be around $2 billion when combined with the investment from its suppliers.

Kia alone will employ around 3,000 to 4,000 employees and when combined with their vendor partners and the R&D centre, the employee base is expected to be around 11,000 individuals, he said. "Such investments have a significant impact on the local economy and we have seen this time and again in other markets too," said Park.