CHENNAI: Are Korean brands having second thoughts on investment in India? After years of major investment, India has slipped to rank 16 in the list of investment destinations for Korean firms.
The FDI inflows factsheet by the Department of Industrial Policy & Promotion (DIPP) shows that, from April, 2000 to March, 2017, Korea ranked 14th with $2.26 billion in investment, 0.68 per cent of the cumulative inflows received. Between 2013 and 2016, when investors from all over the world made a beeline for India, there were only three instances of South Korean investors putting money into the country, according Tracxn.
However, the situation could change, according to analysts. “Korean investors have so far focused more on neighbouring markets like Japan and China but now they are realising that these markets have become more saturated compared to India,” Charlie Lee, CEO, True Balance said.
Recent investments by Korean VC’s in the Indian market have become fruitful and hence the interest in investing in the Indian startup ecosystem has risen. “If not tech startups, anything related to mobile business is what Korean companies are looking to invest in,” said Lee, In addition the rapid increase in smartphone users, emerging markets have potential for further gains. India, in particular, stands out for its staggering growth in engagement on apps.
According to Institute of South Asian Studies, main investors from South Korea in India are large businesses rather than small and medium enterprises (SMEs). While India remains a bright spot with Hyundai, the country’s second biggest automaker by sales, South Korea’s Kia Motors would infuse as much as $ 1.1 billion as one of the big ticket FDIs in India. The construction of the new facility in Andhra Pradesh, with an annual capacity of three lakh units, will begin in the final quarter of 2017.