India and South Korea Take Steps to Fix Trade Imbalance in CEPA Upgrade Talks

Overview

India and South Korea held the 12th round of CEPA upgrade talks in New Delhi from 25-27 May 2026. Both sides agreed to address India's growing trade deficit. They will form new sub-groups on digital trade and supply chains. The upgraded pact aims for balanced and modern trade.

A Fresh Push for Trade Upgrade

India and South Korea have been trade partners for many years. Their agreement, called the India-Korea Comprehensive Economic Partnership Agreement (IK CEPA), started in 2010. But trade between the two countries has changed a lot since then. Now both sides want to update the agreement. From 25 to 27 May 2026, they held the 12th round of upgrade talks in New Delhi. This was an important meeting. Both sides agreed to work faster and address some key issues.

The April 2026 Joint Declaration

The recent talks did not happen suddenly. On 20 April 2026, a Joint Declaration was signed. Union Commerce and Industry Minister Piyush Goyal and Korean Trade Minister Yeo Han-koo signed it. This happened during the South Korean President's state visit to India. In the declaration, both sides promised to speed up the CEPA upgrade negotiations. The upgrade process actually began back in 2016. But talks had slowed down in recent years. The April declaration gave fresh energy to the talks. It set the stage for the 12th round in May.

The 12th Round: Who Led the Talks?

The 12th round was held in New Delhi from 25 to 27 May 2026. The talks were led by senior officials from both countries. On the Indian side, the co-chair was Kapil Chaudhary. He is the Joint Secretary in the Department of Commerce. On the South Korean side, the co-chair was Park Geun-oh. He is the Director General for Trade Agreement Policy at South Korea's Ministry of Trade, Industry and Energy. About 60 delegates from both countries took part in the talks. The meetings were held in a "constructive and cooperative spirit".

What Did They Discuss?

The discussions covered many important areas. These included trade in goods, trade in services, rules of origin, investment, and sanitary and phytosanitary standards (SPS). Each area has its own challenges. Trade in goods deals with products that are bought and sold across borders. Trade in services covers areas like banking, software, and tourism. Rules of origin determine where a product actually comes from. This is important to prevent misuse of trade benefits. Investment rules protect companies that set up businesses in another country. SPS standards are about food safety, animal health, and plant health. This wide range of topics shows how deep the trade relationship is.

The Big Issue: India's Trade Deficit

One of the main topics in the talks was India's trade deficit with South Korea. The original CEPA came into force in 2010. Since then, India's imports from Korea have grown much faster than India's exports to Korea. The numbers tell a clear story. India's trade deficit with South Korea was about 5.1 billion in the financial year ending March 2010. By 2025-26, it had jumped to 15.6 billion. This means India buys far more from Korea than it sells to Korea. The government wants to fix this imbalance. During the 12th round, both sides "acknowledged India's bilateral trade deficit, which has risen significantly since the IK CEPA came into force in 2010, and agreed to address the issue within the overall IK CEPA framework."

New Sub-Groups for Modern Trade Areas