New Delhi and Seoul sign new double taxation pact

India and South Korea on Monday signed a revised double taxation avoidance pact and agreed to begin talks from mid next year to widen the scope of <g data-gr-id="50">free</g> trade pact to boost bilateral economic cooperation. The agreement came during a summit meeting Prime Minister Narendra Modi held with South Korean President Park Geun-<g data-gr-id="48">hye</g> when they also called upon the business community in both the countries to leverage the enormous synergies between their economies for mutual prosperity.

They welcomed “commencement of negotiations to amend the India-Korea CEPA by June 2016 with a view to achieving qualitative and quantitative increase of trade through an agreed roadmap,” a joint statement issued after the meeting said. India and South Korea had implemented the free trade pact, Comprehensive Economic Partnership Agreement (CEPA), in January 2010.

The statement further said the leaders also welcomed “signing of the revised Double Taxation Avoidance Agreement (DTAA)”. The existing DTAA came into effect in 1986. Modi in his remarks <g data-gr-id="47">said</g> “we will also establish a <g data-gr-id="46">channel ?</g> Korea Plus ? to facilitate their investment and operations in India”. Both the leaders shared the view that the trade between the two nations is well below potential. “We agreed to review the Comprehensive Economic Partnership Agreement and other market access related issues. I conveyed our desire to see a balanced and broad-based growth in bilateral trade,” Modi added.

The bilateral trade is in favour of South Korea. <g data-gr-id="42">Trade</g> deficit increased from $5.1 billion in 2009-10 to $8.27 billion in 2013-14. The Ministry of Strategy and Finance and the Export- Import Bank of Korea expressed their intention to provide $10 billion for mutual cooperation in infrastructure, the statement said. Of the $10 billion, $9 billion would come as export credit for priority sectors, including smart cities, <g data-gr-id="40">railways,</g> while $1 billion would be Economic Development Cooperation Fund.

The statement further said that the two governments and the EXIM Banks of the two countries will hold consultations to chalk out a roadmap in order to materialise the envisioned financial support for priority sectors. Companies of the two countries have <g data-gr-id="44">interest</g> in cooperation in the area of <g data-gr-id="51">ship-building</g>, including construction of Indian vessels such as LNG carriers. “The Indian government expressed its hope to discuss <g data-gr-id="43">partnership</g> with Korea with an aim to modernise the Indian shipbuilding industry,” the joint statement said. The two governments decided to provide support for facilitating private sector discussion on ways to co-operate in this area. A Joint Working Group that includes the government and private sectors of the two countries will be established to facilitate co-operation in the shipbuilding sector.

The leaders also discussed the progress made in establishing Korean Industrial Park in Rajasthan. “They agreed that the Industrial Park will help Korean small and medium enterprises to benefit from ‘Make in India’ initiative,” the statement said. The leaders shared the same view that it is desirable to establish more offices of both countries’ respective trade agencies to facilitate trade, investment and industrial cooperation between the two countries.