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INDIA - LATIN AMERICAS BY ATRISHEKHAR - Coggle Diagram
INDIA - LATIN AMERICAS BY ATRISHEKHAR
BACKGROUND
India’s leading communist ideologue, M.N. Roy played an important role in the creation of the Mexican Communist Party in 1917.
Indian indentured labour was shipped mainly to the Caribbean.
NAM movement: As a founding member of the Non-Aligned-Movement (NAM), India generated a lot of goodwill and attracted many Latin American Countries.
Latin America denotes the region south of the United States i.e., Mexico, the Caribbean Islands and South America.
The name is given since the dominant languages spoken in the region are derived from Latin. Around 60% of the population speaks Spanish, and 30% speaks Portuguese.
There are two major trade blocs in the region
MERCOSUR
Mercosur members are Brazil, Argentina, Paraguay and Uruguay
Pacific Alliance
Pacific alliance include Chile, Colombia, Mexico and Peru, which all border the Pacific Ocean
“India did not enter me through my mind but through my senses.”
– OCTAVIO PAZ, THE MEXICAN NOBEL LAUREATE AND FORMER AMBASSADOR TO INDIA
Challenges in the relationship:
Distance and Lack of Connectivity
Language Barrier: Spanish and Portuguese are the dominant languages in the region, while India’s official language is Hindi and English.
Limited Cultural Understanding
Protectionist Policies: Protectionist measures (by both regions), such as tariffs and non-tariff barriers, could increase costs for businesses and restrict access to markets.
Political Instability: Political instability and economic uncertainties in some Latin American countries could deter Indian businesses from investing in the region.
Lack of High-Level Interactions: High-level interactions between India and Latin America have been limited.
COOPERATION
India and Brazil are members of the BRICS grouping and the IBSA Dialogue Forum. India has also signed strategic partnership agreements with Brazil, Mexico, and Chile.
India’s annual trade of US$30 billion to US$50 billion with Latin America (Trade has been rising constantly by 25% every year). Indian companies, mainly ONGC, and private sector organizations like Reliance, and Gammon India, have invested in producing oil and gas fields in LAC. Indian companies have been interested in the critical deposits of resources such as copper and lithium
Across Latin America, there are thousands of followers of Indian spiritual gurus like Sai Baba, Brahma Kumaris, and Hare Krishna. There is also growing interest in Indian Ayurvedic and natural products.
Today, the Indian diaspora accounts for a major portion of the populations of Trinidad, Suriname and Guyana.
India and Brazil have an MoU on cooperation in the field of Biotechnology. India and Mexico have signed an agreement on cooperation in the fields of Science and Technology.
India has signed an MoU on Defence Cooperation with Brazil. India also has defence cooperation agreements with Chile and Mexico.
Universities student and faculty exchanges. The Indian Council for Cultural Relations (ICCR) has also been offering scholarships to LAC students for higher education in India.
A growing trade is an indicative of growing India Latin America Relations. During FY 2022-23, India recorded a trade of $48 billion, the highest-ever business with the region.
India’s total export from LA in FY 23 was $22.41 billion
Petroleum products – $4.7 billion
Vehicles – $4.33 billion
Chemicals – $3.4 billion
Machinery – $2.73 billion
Pharmaceuticals – $1.45 billion
India’s total import from LA in FY 23 was $25.59 billion,
Crude oil – $7.6 billion
Gold – $6.6 billion
Vegetable oil – $5.7 billion
Copper – $1.87 billion
Machinery – $245 million
Latin America is a substantially large market for Indian products. With 19 countries, a population of around 600 million and a $6 trillion GDP, there are large unexplored opportunities in LA for Indian businesses. While the exports have more than doubled from $10 bn in 2010, to $22 bn in 2022, they can very much become $50 billion by 2030.
Recently, Latin America has emerged as a main source of imports of vegetable oil (mostly soy oil). While Argentina was the #1 global supplier of soy oil with 3.3 billion dollars, Brazil contributed around $2.4 bn of vegetable oil.
Gold is a major item of import for India, with Bolivia contributing the lion’s share of $ 2.5 bn, followed by Peru ($ 1.8 bn).
Chile was the main supplier of copper and other mineral concentrates from the region with an export of $ 1.03 bn, followed by Peru $ 391 m, Panama $ 204 m and Brazil $ 141 m.
Present and Possible Areas of Cooperation
Agriculture
India and LAC are today the two largest consumption economies and therefore, food security is critical to both populations.
Indian investments in the region include millet farming in Guyana, edible oil production in several countries, agrochemical manufacturing sites in Argentina, Brazil, Columbia and Mexico and the setting up of agro-R&D centres.
While vegetable oil currently dominates Indian imports from the region, LAC can also become a supplier of pulses for India, which accounts for 50% of global pulse imports.
Fruits and vegetables are also exported to India by Chile and Peru and since these come during the off-season in India there is no issue from the domestic producers.
Energy
In the last fifteen years, Latin America has become a regular new source for India’s imports of crude oil.
The region as a whole has current oil reserves of 336 billion barrels, one-fifth of the total global reserves, with Venezuela alone having reserves of 298 billion barrels (the highest in the world).
Both India and Latin America are attaching priority to renewable energy such as solar and wind energy. Indian company Suzlon has done wind energy projects in Brazil and Uruguay and is on the lookout for opportunities in other countries.
Chile has massive multibillion-dollar solar energy projects in the Atacama Desert, which is a new opportunity for Indian investors and suppliers of equipment.
Brazilian companies that have contributed to the success story of the use of fuel ethanol could enter the Indian market which is trying to implement ethanol-blending of petrol.
Metal & Minerals
In FY 23, Gold and Minerals constituted the biggest imports of India from Latin America.
India is the largest importer of gold in the world, while LAC is a major producer and exporter.
India also buys precious stones from Colombia and Brazil among other countries.
Lithium, a major component of electric batteries, is also gaining prominence as India seeks to shift to EV by 2023, fueled by ‘Make in India’. Bolivia has the world’s largest reserves of Lithium, and it can help India’s electric revolution.
The supply chains are still in the developing phase which sometimes involve middle players. Direct access to each other’s economies will increase profit for both.
Pharmaceuticals
India exports almost one and a half billion dollars’ worth of pharmaceuticals to Latin America.
Ayurveda is also becoming popular in some countries of the region
The less-expensive Indian generics have helped Latin American consumers and governments to reduce the cost of healthcare
Information Technology Sector
Indian IT companies operate in most of the LA countries of the region employing over 25000 young Latin Americans.
The ‘nearshoring’ model relies on Indian software and expertise, Latin American human resources, and the advantage of working in American time zones.
