India, South Korea Agree to Form Sub-Groups to Upgrade CEPA Trade Pact

12th round of negotiations in New Delhi focuses on digital trade, supply chains and industrial cooperation

India and South Korea have decided to form sub-groups on digital trade, supply chains, and strategic industrial cooperation to expand talks aimed at upgrading the existing Comprehensive Economic Partnership Agreement (CEPA).

The decision was taken during the latest 12th round of negotiations in New Delhi to upgrade the free-trade agreement (FTA), which concluded on Wednesday. During the current round, discussions were held on trade in goods, trade in services, rules of origin and origin procedures, investment, and sanitary and phytosanitary standards, the commerce department said in a press release Thursday. It further stated, “It was also decided to constitute sub-groups to discuss cooperation in the areas of digital trade, supply-chain cooperation, and strategic industrial cooperation.”

India and South Korea had signed the FTA in 2009 and implemented it in 2010. Following its rollout, India’s trade deficit with the nation expanded significantly. Within five years of the trade pact, India’s trade deficit with South Korea nearly doubled as imports rose 63 per cent, while exports increased only 27 per cent.

A trade balance analysis shows widening gaps over the years. In 2009 (pre-FTA), exports stood at $3,772.27 million and imports at $8,229.75 million, resulting in a trade deficit of -$4,457.48 million. In 2010 (first full year with FTA), exports were $3,634.46 million and imports $9,922.32 million, with a deficit of -$6,287.85 million.

In 2011, exports reached $4,549.87 million against imports of $12,362.47 million, producing a deficit of -$7,812 million. In 2012, exports were $4,076.36 million and imports $13,675.09 million, with a deficit of -$9,598.73 million. In 2013, exports stood at $4,495.54 million while imports were $12,426.66 million, leading to a deficit of -$7,931.12 million. In 2014 (fifth year under FTA), exports were $4,794.86 million and imports $13,437.25 million, resulting in a deficit of -$8,642.39 million.

For 2025 (latest), exports were recorded at $6,016.11 million while imports stood at $21,161.48 million, with a trade deficit of -$15,145.37 million.

India had a trade deficit of $15.15 billion with South Korea in 2025, with $21.16 billion in merchandise imports, which primarily included electrical machinery and equipment, iron and steel, nuclear reactors and mechanical appliances, mineral fuels, and organic chemicals. India exported goods worth $6 billion to South Korea last year.

“Both sides have acknowledged India’s bilateral trade deficit, which has risen significantly since the CEPA came into force in 2010, and agreed to address the issue within the overall CEPA framework,” the commerce department mentioned in the release.

The two sides also agreed to review the terms of the deal during South Korean President Lee Jae-myung’s visit to New Delhi in April this year.

At the latest round, co-chaired by Kapil Chaudhary, joint secretary at the commerce ministry, and Park Geun-oh, director general for trade agreement policy at Korea’s trade ministry, both nations reviewed the progress achieved in the negotiations.