There is a particular kind of perfidy that arrives dressed as fortuity. It arrives with ceremonial fanfare and departs with your wealth. India has been living this betrayal for 16 years. It is only now finding the vocabulary to name it.
Recently, a day before South Korean President Lee Jae Myung’s aircraft touched down at Palam, the foreign ministry held its customary pre-visit briefing at South Block. While briefing the reporters, Secretary (East) P Kumaran made an unusual disclosure: “Bilateral trade is close to $27 billion, but it is quite unbalanced. Our exports are in the range of about $6.5 billion, while Korea’s is about $21.4 billion. So there is a need to rebalance the CEPA (Comprehensive Economic Partnership Agreement).”
The sentence was deliberate and it wasn’t a diplomatic deviation. It was the government publicly naming an asymmetry that had gone diplomatically unspoken for 16 years. What followed—the handshakes, the fanfare, the 16 MoUs, the headline promise of doubling bilateral trade to $54 billion by 2030—must be read against that uncomfortable reality.
India’s exports to South Korea plummeted to $5.82 billion in 2024-25, as against $8 billion in 2021-22. Korean exports to India surged to $21.06 billion over the same time. The trade deficit, at $15.2 billion in 2024-25, has roughly tripled since the 2010 CEPA came into force. Indian exports to Korea contracted at an 11 percent compound annual rate between 2021-22 and 2023-24, while Korean imports grew 10 percent a year. Fifteen years of CEPA have tripled the gap that the 2030 trade target will now have to close.
The roughly $50-billion bilateral target Modi and Lee announced is not new. Moon Jae-in and Modi set the same goal in 2019. What is new is Delhi’s public acknowledgement that hitting that number without fixing the ratio would simply enlarge the chasm.
The roughly $50-billion bilateral target Modi and Lee announced is not new. Moon Jae-in and Modi set the same goal in 2019. What is new is Delhi’s public acknowledgement that hitting that number without fixing the ratio would simply enlarge the chasm.
At the heart of the outrage stand the Korean blue-chip subsidiaries whose Indian operations now dwarf their parents in perceived value and cash-generation power. For example, LG Electronics India reported revenue of Rs 24,366 crore and a net profit of Rs 2,203 crore last year, up 46 percent year-on-year. Royalty payments to the South Korean parent reached Rs 454.61 crore. But the real headline came with its October 2025 IPO: the Indian subsidiary’s market capitalisation surged to approximately $13 billion upon listing, eclipsing its South Korean parent’s market cap of about $9 billion at the time on the Seoul exchange. In one stroke, LG India’s net worth in the eyes of global investors surpassed that of its Korean headquarters’. And it was purely due to generous policy environment.
Maruti Suzuki had earlier achieved the same inversion. India’s largest carmaker has recently been worth approximately $57 billion, more than double its Japanese parent Suzuki Motor Corp’s market cap. The pattern is not coincidental. It is structural.
Hyundai Motor India and its sibling Kia tell a similar tale of extraction masked as investment. Last year, the company reported consolidated revenue of approximately Rs 69,193 crore and a profit after tax of `5,640 crore. Its IPO, India’s largest, raised $3.3 billion through an offer-for-sale mechanism, with the entire proceeds flowing to the Korean parent rather than to the Indian subsidiary. Royalty payments stand at 3.5 percent of sales revenue, mysteriously raised from 2.5 percent in earlier years, translating into thousands of crores annually repatriated to Seoul. Together, these auto majors command nearly 20 percent of India’s passenger vehicle market. Such an anomaly has left Tata Motors and Mahindra to fight an uphill battle against what many term subsidised Korean pricing power.
Samsung India completes the triumvirate of value extractors. Its revenue for the first time crossed Rs 1.11 lakh crore during 2025, making it the only consumer-electronics firm in India to cross the trillion-rupee mark. During 2024, its net profit stood at Rs 8,188 crore on revenue of Rs 99,541 crore, while royalty remittances to the Korean parent hit Rs 3,322 crore, roughly 40 percent of that year’s net profit. Retained earnings have ballooned and been diverted to Vietnam.
Even Japanese major Suzuki, through its Maruti Suzuki India avatar, has come under parallel attack for similar preferential treatment. Long accused of royalty structures that siphon significant portions of profit, the message from Indian auto captains is clear: when foreign giants, Korean or Japanese, enjoy duty arbitrage, technology-transfer loopholes and policy sweeteners, domestic firms bleed competitiveness. Indian policymakers, they allege, have been influenced into crafting an environment where FDI is feted while local investors shoulder the risk without equivalent reward.
The most galling dimension for many is the Vietnam paradox. Korea’s cumulative FDI in India stood at about $10 billion till 2024, despite India’s economy being 10 times larger than Vietnam’s. Profits earned from Indian consumers through high royalties, IPO cash-outs and dividend flows are effectively subsidising Vietnamese factories that then export finished goods back into India. Why? Swadeshi leaders ask this in rising chorus: should Korean conglomerates plough cash extracted from India into manufacturing facilities in a smaller neighbour that then undercuts Indian industry? The optics is toxic: India as a lucrative cash cow, Vietnam as the preferred factory floor.
This is no abstract economic grievance. It strikes at the soul of India’s self-reliance narrative. Decades of liberalisation were sold on the promise that FDI would catalyse domestic industry, transfer technology and create balanced growth. Instead, the policy has tilted towards foreign giants who repatriate profits, royalties, special dividends and IPO proceeds liberally.
On the other hand, Indian firms struggle with higher compliance costs, delayed approvals, and a royalty burden that starves local innovation. As CEPA upgrade talks accelerate post the Lee visit, the moment of reckoning has arrived. Yet the fundamental question lingers: will Delhi muster the courage to rewrite the rules, or will Korean or Japanese influence once again preserve status quo that extracts wealth while eroding India’s industrial sovereignty?
The answer to that question will define not merely the future of India-Korea trade relations, but the credibility of every strategic partnership India signs from this point forward. CEPA should be rewritten not by negotiators who measure success in MoU counts, but by those who measure it in industrial jobs created and domestic enterprises strengthened.
India possesses the leverage it has never previously exercised. It’s the world’s largest consumer market and the world’s fastest-growing major economy. The future will reveal whether New Delhi’s negotiators, seated across from their Korean counterparts, have the institutional will to block the outflow, or whether India, once again, signs the documents, hosts the dinner and watches the profits leave on the next flight to Seoul.
Read all columns by Prabhu Chawla
PRABHU CHAWLA
prabhuchawla@newindianexpress.com
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