India is on the verge of becoming the world's most populous nation, while South Korea stands as a leading representative of newly industrialized countries within Asia amidst global industrial growthOver the past two decades, these two countries have established a trading relationship marked by relative stability, primarily based on their complementarity in tradeThis relationship deserves a closer look, particularly in terms of its dynamics, challenges, and potential future developments.

India's exports to South Korea have been predominantly centered around natural resources such as minerals, metals, and fuelsIn contrast, the major imports from South Korea include manufactured goods, transportation equipment, chemicals, and electronic device componentsThe gap in industrial capabilities between the two nations has resulted in a significant disparity in their production capacities for manufactured goods, leading to a notable trade deficit for India in this sector

Consequently, the trade imbalance with South Korea has emerged as a crucial issue for India, indicating a need for strategic shifts in trade policies.

In 2022, India imported goods from South Korea worth over $20 billion

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The significant increase in import trade played a pivotal role in creating new highs for India’s trade deficit with South Korea, marking the highest figure in over 20 yearsThis shift signals an important trend within the trade dynamics of both nations.

Among the non-manufactured goods that India exports to South Korea, resources like fuels, metal ores, and foods have seen substantial growthOf particular note, in 2022, these resource-based exports accounted for more than 65% of India's total export trade to South KoreaThis dominance of resource commodities not only serves as a foundation for India's export strategy but also highlights a critical area in which India manages to secure a trade surplus with South Korea.

On the flip side, India imports primarily manufactured goods such as machinery, transportation equipment, chemicals, and electronic components from South Korea

This sector has become the main source of India’s trade deficit with South Korea, acting as a significant contributor to the ongoing imbalance in their trade dynamics.

In 2022, the surge in trade volume for imports from South Korea can be largely attributed to substantial increases in manufactured goods, transportation machinery, and electronicsThe rapid growth in these categories underscores the extent to which India relies on South Korean advanced technologies and high-quality products for meeting its domestic industrial needs.