India And Korea Share A Common Vision Towards Building An Equitable And Just Politico-Economic International Order: FM

The Union Finance Minister Shri P. Chidambaram said that India and Korea share a common vision towards building an equitable and just politico-economic international order. Shri Chidamabaram said that relations between India and Korea are based on strong historical ties, shared cultural heritage, commitment to democracy and a mutual desire to establish and strengthen long-term comprehensive strategic partnership. The Finance Minister Shri Chidambaram was speaking at the 4th India-Korea Finance Ministerial Meeting here today.

The Finance Minister stressed that India’s economic fundamentals are strong. He said that between 2005 and 2007, India achieved its growth potential – in fact exceeded it – and recorded growth rates of over 9 percent. During the 20-year period from 1991 to 2011, the average growth rate was close to 7 percent. As is evident, even in face of most adverse global factors, we have remained as one of the fastest growing economies in the world, the Minister added. He said that in this uncertain global situation, both India and Korea can and should articulate common positions and play a vital role in international economic diplomacy.

The Union Finance Minister Shri P. Chidambaram said that to promote domestic and foreign investments in infrastructure, we have taken two major steps: First, a Cabinet Committee on Investment (CCI) has been set-up to expedite decisions and clearances for implementation of projects. This is headed by the Prime Minister. Second, is the creation of Infrastructure Debt Funds (IDFs) to raise low-cost long term resources for refinancing infrastructure projects. The Finance Minister said that he is confident that Korean companies will make good use of these opportunities to our mutual advantage.

The Finance Minister Shri Chidambaram said that India is in the process of deepening policy reforms in its financial sector and addressing gaps in the overall regulatory architecture. The Finance Minister said that India and Korea could collaborate more intensively in this area through experience sharing. Financial inclusion remains a very high priority for us, the Minister added. He said that we had constituted the Financial Sector Legislative Reforms Commission (FSLRC) to review and rewrite the legal-institutional framework of the Indian financial sector laws. Its recommendations are currently being examined for implementation, he added.

The Finance Minister Shri Chidambaram said that since the country’s growth potential is around 8%, several steps have been in the recent months to reverse the economic slowdown, rein in the fiscal stress and improve investment climate. These measures inter-alia include liberalization in the FDI regime, measures to improve performance of the manufacturing sector, promotion of exports, banking reforms, deepening of financial markets, and fiscal consolidation. He said that in the case of POSCO plant in Orissa, he is made to understand that the land acquisition process has been completed.

Beside the Finance Minister Shri P. Chidambaram, Shri Sumit Bose, Finance Secretary, Dr Arvind Mayaram, Secretary, Department of Economic Affairs, Shri K.P. Krishnan Additional Secretary along with other senior officers from the Ministry of Finance were part of the Indian delegation. Korean side was led by Mr. Hyun Oh Seok, Deputy Prime Minister and Minister of Strategy and Finance, Republic of Korea along with Mr. Yoon Tae Yong, Director General, International Economic Affairs Bureau, Mr. Gwak Bum Gook, Director General, Treasury Bureau and Mr. Han Myung Jin, Director General, Tax Analysis and International Tax Affairs Bureau among others.

Following is the text of the Agreed Minutes of the Fourth India-Korea Finance Ministerial Meeting which were signed here today at the end of the aforesaid Meeting by both the Finance Ministers i.e. the Finance Minister of India Shri P. Chidambaram and Mr Hyun Oh Seok, Deputy Prime Minister and Minister of Strategy and Finance, Republic of Korea:

“The Fourth Korea-India Finance Minister’s Meeting (hereinafter the "Finance Minister’s Meeting") was held here today between the Ministry of Strategy and Finance of the Republic of Korea (hereinafter “Korea”) and the Ministry of Finance of the Republic of India (hereinafter “India”).

The delegation of the Republic of Korea (hereinafter the "Korean side") was led by Mr Oh-Seok Hyun, Deputy Prime Minister and Minister of Strategy and Finance and the delegation of the Republic of India (hereinafter the "Indian side") was led by Shri P.Chidambaram, Minister of Finance.

Both sides exchanged views on macroeconomic outlook and policy directions and measures necessary to reinforce cooperation under the multilateral framework and appreciated the deepening and developing bilateral economic cooperation.

Both sides had in-depth discussions on issues of mutual interest in areas of trade and investment, public service and fiscal affairs, taxation and finance, and infrastructure development and cooperation.

Macroeconomic Developments and Policy Directions

Both sides exchanged views on the current economic situation and policies of each country, and recognized the need for strengthening economic cooperation between the two countries.

Cooperation between Korea and India under Multilateral Framework

Both sides recognized the need to strengthen cooperation under the multilateral framework, and agreed to facilitate discussions at the G20 level and regional cooperation forums to actively address other global issues.

Cooperation in Trade and Investment

Both sides underscored the need to evolve a vision for medium and long-term cooperation between the two countries for systematic and close bilateral cooperation, and agreed that identified research institutes of the two countries would jointly discuss this subject.

The India-Korea Comprehensive Economic Partnership Agreement (CEPA) has contributed to enhancing trade and investment flows between the two countries. It has brought the two economies closer. Both sides agreed to continue their consultations on the CEPA.

In order to enhance trade relations, both sides further agreed that, in case either Customs Authority notifies its counterpart of difficulties encountered in the process of Customs clearance, the two Authorities will make efforts to address the difficulties expeditiously.

Both sides agreed to make efforts to promote SME cooperation between the two countries by sharing knowledge and experience gained on SME policies and by creating strategic industrial partnerships for investment and technical cooperation.

Cooperation in Public Service and Fiscal Affairs

Both sides shared the view that a financial management information system contributes to strengthening of a nation’s financial management. Both sides agreed to boost mutual benefits through closer cooperation in the subject.

Both sides agreed on the importance of management of state property and agreed to strengthen cooperation in the development of systems that will enable the management of state property. Furthermore, both sides agreed to promote the sharing of ideas for efficient management of state property and hold regular meetings on the issue when required.

Both sides agreed to cooperate and work together to improve public procurement systems including e-procurement systems. Both sides agreed to cooperate to facilitate mutual exchange between the public procurement entities of Korea and India.

The Korean side proposed cooperation through a Knowledge Sharing Programme (KSP) in order to facilitate mutual economic cooperation, and the Indian side agreed to consider this favourably.

In accordance with the MOU on cooperation between the Ministry of Strategy and Finance of Korea and the Ministry of Finance of India, both sides agreed to promote a short-term training course for identified officials of the two Finance Ministries at a mutually agreed location and time.

Cooperation in Taxation and Finance

Both sides agreed to make an effort to conclude the revision of the Korea-India Double Taxation Avoidance Convention (DTAC) expeditiously after reviewing their respective positions on major pending issues for the revision.

Both sides agreed to consider issue of license necessary to establish Bank Branches and offices in each other’s country if an applicant bank is judged to have qualified based on relevant laws, regulations and eligibility requirements.

Both sides shared recognition of the necessity for cooperation in financial supervision and agreed to discuss and conclude an MOU on financial supervision between The Reserve Bank of India and the Financial Services Commission, Korea.

Both sides agreed to strengthen cooperation in the infrastructure sector between the two countries by the signing of an MOU between the Export-Import Bank of Korea and India Infrastructure Financing Company Ltd in January 2014 for the purpose of mutual exchange of information on infrastructure development projects.

Both sides agreed to strengthen cooperation in bilateral trade by means of the Master Interbank Export Credit Agreement worth USD 200 million between the Export-Import Bank of Korea and State Bank of India to be signed in January 2014, which will facilitate the provision of export credit to India.

Cooperation in Infrastructure Development

The Indian side agreed to the proposal from the Korean side for the two sides to sign the MOU on railway cooperation and for holding a senior officer level railway cooperation meeting between the two countries.

The Indian side agreed to the proposal by the Korean side for the two sides to sign the Framework of Cooperation (FOC) on roads and to hold a Joint Committee Meeting on road cooperation between the two countries after the FOC has been signed.

The Indian side requested the Korean side to encourage investment by Korean long-term infrastructure related funds in the various infrastructure investment instruments that have been and are being launched in India. The Korean side agreed to consider the same positively.

The Korean side requested for facilitation from the Government of India for speedy administrative support including issue of clearances and licenses required in the various projects that Korean companies are participating in and committed to at the State level. The Indian side agreed to provide all possible assistance within the federal structure in India.

Both sides agreed to hold the next round of air consultations in a mutually beneficial way recognizing the importance of air services in promoting, economic, social and cultural exchanges and people-to-people interactions.

The Korean side proposed to conclude an MOU including establishing cooperation channel, a joint committee at the Director General level, for enhanced cooperation and exchanges in the field of electric power and the Indian side agreed to consider the proposal including holding a joint committee meeting on cooperation in electric power at a mutually agreed time.

Recognizing that a Science and Technology Cooperation fund of USD 10 million has served to implement joint research projects, both sides agreed to step up cooperation by creating an additional joint fund of USD 10 million (with a contribution of USD 5 million by each side) to promote applied research and development programmes which will be conducted jointly by academia, research institutes and businesses of both countries.

Both sides recognized that the Korea-India Finance Ministers’ Meeting can contribute practically to reinforcing economic cooperation between the two countries and reaffirmed their commitment to making efforts to strengthen basis for mutual cooperation in the future. Both sides agreed to hold the Fifth Korea-India Finance Ministers’ Meeting in Korea in 2014.”