South Korea has become the largest foreign investor in Asia's second emerging giant, India, with a mega deal. Korean steelmaker Posco (fifth largest steel maker in the world) has established a local subsidiary in the state of Orissa. The mill and mining complex will cost Posco $12 billion and employ some 40,000 workers once it's fully operational in 2010.

South Korean firms like Hyundai, LG and SK Group have already carved out a notable presence in the country—the world's second largest and a potentially huge market for products like refrigerators, washing machines and television sets.

Posco could take Korea Inc.'s success to another level. If India's manufacturing sector meets robust growth forecasts and the company is able to sidestep nationalist critics, Posco's Orissa facility will open just in time to meet a surge in demand for steel. Today, India consumes just 30 kilograms of steel per capita each year, a mere eighth of China's annual intake. Its biggest customers are expected to be Korean auto- and white-goods makers in India.