Modi explores Korea Inc.
Hyundai Motor Group Chairman Chung Mong-koo shakes hands with Indian Prime Minister Narendra Modi in a meeting in Seoul on Tuesday. Modi, who has been trying to attract foreign investments to boost India’s manufacturing sector, asked the Hyundai Motor Group chief to make more investments in cars and other basic industries including railways and construction. Provided by the company
According to the Korea Trade-Investment Promotion Agency (Kotra), a massive amount of investments have been flowing into India’s economic hubs including New Delhi, Mumbai and Chennai by foreign companies such as General Electric, Amazon, Honda and Suzuki. The amount of foreign direct investment is expected to increase 130 percent this year from last year’s 26 trillion won ($ 23.9 billion).
Some of the toughest competition is predicted to be in the car business and Hyundai Motor Group Chairman Chung Mong-koo, who rules the nation’s two auto giants, Hyundai Motor and Kia Motors, didn’t want to miss his chance. On Tuesday, Chung met the prime minister for about 15 minutes at the Hilton Hotel in central Seoul and discussed how they will cooperate with each other to boost India’s car industry.
After the meeting, when reporters asked Chung whether he will build a third Hyundai Motor plant in India - which is also an important production base for exports to Europe - he replied, “We’re considering it.”
Hyundai Motor said the meeting was meant to strengthen its relationship with India. The prime minister has been trying to build up India’s manufacturing industry, and car sales in India increased 3.2 percent last year from 2013. About 2.74 million cars are expected to be sold this year, a 7.8 percent rise from a year ago.
“Hyundai Motor Group planned to produce and sell 640,000 cars with the two plants in Chennai this year, which will be a 4 percent rise from a year ago,” Chung said in the meeting. “Of the 640,000 units, 470,000 cars will be supplied to India and the remaining 170,000 vehicles will be exported to 110 nations.”
Excluding commercial vehicles, India is the world’s sixth-largest car market with annual sales of about 2.5 million cars. Hyundai Motor built its first Indian plant in 1998 when only about 350,000 cars were sold in the country yearly because it thought the market had huge potential. It built its second plant in 2007. The two plants have produced 6 million cars as of Saturday and plan to sell 465,000 cars in India this year, which will be a 13 percent rise from a year ago.
Chung also hopes that Hyundai Motor Group can have a role in India’s basic industries including construction and railway development.
Later in the afternoon, Kwon Oh-joon, CEO the nation’s No. 1 steelmaker, Posco, met Modi to discuss India’s western regions including the state of Maharashtra, where the company is operating a cold-rolled steel mill, which it built in January. Posco has been increasing investments in India as it considers the country its next-generation production base for car steel sheets.
“If the Indian government helps other companies expand their businesses in the western region, the condition of our Maharashtra plant will be improved,” Kwon said.
The 15-minute meetings went on in succession. Lotte Group Chairman Shin dong-bin discussed the company’s tourism and food businesses in India. Samsung Electronics mobile unit head J.K. Shin shared the company’s vision of the Long-Term Evolution (LTE) business that the company has been working with Indian companies on. “The prime minister asked us to cooperate more in mobile device manufacturing,” Shin said. Samsung Electronics is the only foreign company operating two mobile phone production plants in India.
Modi got out of Seoul, too. In order to have a 30-minute tour of Hyundai Heavy Industries’ shipyard in Ulsan, South Gyeongsang, he took a four-hour round trip to Ulsan and learned about the plant’s technological know-how.
In a Korea-India CEO Forum that was held prior to the individual meetings, about 300 business leaders from the two countries and President Park Geun-hye encouraged more business between the two countries. “The two countries should provide a new growth engine,” Park said in a speech, “by sharing each other’s plans to innovate the manufacturing industry.”
Korean business groups asked the Indian government to ease administrative regulations, lower legal barriers to market entrance and enhance basic infrastructure. In response, the Indian government said it has already started deregulations.
BY KWON SANG-SOO, KIM JI-YOON [kwon.sangsoo@joongang.co.kr]
with the Korea JoongAng Daily
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