Along with other major economies, India is actively promoting strategic industries as its broader efforts to secure supply chains and accelerate industrialization. Strategic sectors play a pivotal role in advancing the country’s long-term economic resilience and technology self-reliance.

This report focuses on six strategic industries: biotechnology, space, smart infrastructure, defence, electric vehicles, and semiconductors. It first examines data on trade, foreign investment, and research and development expenditure. With the exception of the biotechnology sector, India’s current trade competitiveness in these industries remains limited. However, recent foreign investment inflows and research development spending indicate strong potential for substantial growth across all six sectors.

An in-depth analysis of the Indian government’s industrial policies reveals a clear and proactive approach to fostering these sectors. The government has established comprehensive sectoral strategies and detailed implementation plans, while allocating significant resources through production- and consumption-linked subsidies, direct investment, and public procurement. Designated institutions have been tasked with managing and coordinating these efforts. A notable feature in India’s policy stance is its strong emphasis on mobilizing private investment, notably by easing restrictions on foreign direct investment inflows and vitalizing the startup ecosystem.

To date, cooperation between Korea and India in strategic industries has been limited. While several engagements took place before and after Summits in the 2010s, most projects lost momentum. Unlike other major countries, Korea currently lacks a bilateral framework or blueprint guiding cooperation with India in strategic sectors.

The report provides three policy suggestions.

First, establish a ‘Korea-India Strategic Industry Cooperation Initiative.’ This initiative should articulate the shared vision, principles, and objectives of the two countries, while identifying potential cooperation areas and responsible institutions. As a part of the initiative, Korea and India should also hold regular high-level policy dialogues to ensure sustained coordination and strategic alignment.

Second, support Korean companies’ participation in India’s strategic industries. Korean firms are showing growing interest in India’s strategic sector but continue to face regulatory and administrative hurdles. The Korean government should play an active role in addressing issues that individual companies cannot resolve on their own by engaging in close consultation with Indian counterparts. It should also assist Korean firms in accessing India’s industrial subsidies and foster stronger business networks by organizing regular events that connect Korean companies with key players in India’s strategic industries.

Finally, leverage development finance to promote industrial cooperation. Korea can use development finance to support projects that advance India’s strategic industries, particularly those related to smart infrastructure and industrial corridors. Such projects would not only contribute to India’s development goals but also create new opportunities for Korean companies seeking to expand their presence in India. Additionally, human resource development and startup support in strategic industries represent promising areas for Korea’s development finance engagement.