The Indian government has put in place important policy measures and institutional frameworks to facilitate enhanced bilateral trade and commercial ties with countries of the region. The Foreign Trade Policy 2015-2020 has identified Latin America as a Focus Market, writes Saroj Mohanty for South Asia Monitor
By Saroj Mohanty
Latin America is well up on India’s business and diplomatic radar as New Delhi has sought to explore “newer avenues” of generating mutual prosperity and deepen strategic links with the geographically distant region.
Prime Minister Narendra Modi met the presidents of Mexico and Argentina on the sidelines of the July 7-8 G20 summit in Hamburg and discussed “various aspects of bilateral relations.”
The official calendar in the preceding months was also marked by high-level visits, economic conclaves and foreign office consultations. In May, India and Chile expanded their Preferential Trade Agreement (PTA) to avail tariff concessions facilitating bilateral trade further.
Chile is India’s fourth largest trade partner after Brazil, Venezuela and Argentina. The expanded PTA, which covers 96% of two-way trade, is expected to deepen India’s engagement with the Pacific Alliance trade bloc of which India is an Observer Member. India is also negotiating a similar agreement with Peru.
Also in the same month, India discussed further steps with Ecuador and Colombia to promote balanced trade in potential sectors as part of the Joint Economic and Trade Committee meeting.
Ecuador is seeking a PTA with India. In talks with a visiting delegation led by Commerce Secretary Rita Teaotia, both Ecuador and India decided to expand cooperation between their investment promotion agencies and facilitate greater exchange of information on investment and business opportunities.
In Colombia, the two countries agreed to explore different areas of mutual interest such as non-conventional energy, food processing and bio-technology products at the meeting of the Joint Committee for Business Development Cooperation.
Additionally, for the first time, the India-Latin America & Caribbean Conclave was held outside India, in the Mexican economic hub of Guadalajara.
This, according to the Mexican Ambassador to India Melba Pria, is of “huge significance” as it showed that India is reaching out to Latin America. India and Mexico also held their foreign office consultations in Mexico City in June and discussed the upgrading of their privileged partnership, formed in 2007, to a strategic one.
The two countries also resumed their bilateral naval visits after decades. Mexico supports India’s efforts to join the Nuclear Suppliers Group.
Latin America, like Africa, is an emerging growth pole. The region has a combined GDP of over USD 4 trillion and its rapid growth has opened up possibilities of expanded business.
It is also growing in importance for India’s energy security, accounting for around 20% of India’s oil imports currently.
The region comprising 43 countries embodies large markets and has emerged as an export destination and import source for India.
And India, faced with rising protectionism and downbeat global demand, is moving towards increasing diversification of its external trade. This is because India needs open and newer markets to grow at 8 to 10%.
As Chief Economic Advisor Arvind Subramanian points out, India experienced fastest growth during the first decade of this century when its exports were the highest. Thus, at a fundamental level, the economic resurgence of India and Latin America are intersecting, opening up new areas of business and collaboration.
Links between the two in the first few decades after India’s independence were insubstantial because of the geographical distance and the lack of a common history that led Jawaharlal Nehru to describe the region as “half mystical, half mixed with romance and all that.”
Trade and business were inconsequential as many Latin American countries and India pursued import substitution.
However, in literature and ideas, an osmotic process was on. Argentine writer Victoria Ocampo hosted Rabindranath Tagore in Buenos Aires in 1924-25 and had published some of his works in her magazine ‘Sur’.
Tagore also influenced Chilean poet Pablo Neruda who, in his visits to India, was bowled over by Indian women and the saris they wore, wrapped “around the body with supernatural grace”.
Mexican writer Octavio Paz, who served in India as his country’s top diplomat in New Delhi in the 1960s, was highly impressed by Indian civilisation and published a memoir of his time in India in the 1990s.
Many Indians have also been influenced by the Latin literary genre of magical realism as practised by Gabriel Garcia Marquez and ideological persuasion of Che Guevara and the Cuban Revolution.
But systematic interactions at the official level began in the 1990s following the structural changes in both the regions. Today, the relationship has entered a new phase of cooperation, thanks to new interests and joint projects. A development partnership is also growing in areas such as space.
The Indian government has put in place important policy measures and institutional frameworks to facilitate enhanced bilateral trade and commercial ties with countries of the region.
The Foreign Trade Policy 2015-2020 has identified Latin America as a Focus Market. Also, India is considering joining the Inter-American and Caribbean Development Banks as a member to work more closely with countries of the region.
“India’s trade relationship with LAC (Latin American countries) is primarily through bilateral relationships. Time has now come to map and analyse the role of multiple groups and multilateral trade agreements in furthering the India-LAC relationship through common elements of mutual interest,” said Gen (Retd.) V.K. Singh, India's Minister of State for External Affairs.
(Saroj Mohanty is a veteran journalist and commentator. He can be contacted at firstname.lastname@example.org)