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Latin America and Caribbean countries look towards India for trade diversifocation, experts urge dialogue.
Oct 18, 2022

Countries from the Latin America and Caribbean (LAC) region have started to look towards India for trade diversification and ways to leverage its technological know-how in industries like pharma and IT. And, this has become even more evident after the pandemic and the war in Ukraine shifted supply chains, harming LAC economies.

'India-LAC trade nearly doubled over the past decade, reaching $42.5 billion in 2021 and there are over 160 Indian companies present in LAC with investments exceeding $30 billion, said Karin Costa Vazquez, Executive Director of the Center for African, Latin American and Caribbean Studies.

According to her, 'India has emerged as a strategic partner for LAC in today’s geopolitics. This is particularly relevant for Brazil, where the upcoming presidential elections and the new foreign policy directions create opportunities to rethink relations with India.'

Ms Vazquez who is also Associate Professor at OP Jindal Global University (CALACS/JGU) speaking at a webinar `India – Latin America Dialogue: Expanding Horizons’ said, 'Beyond the trade ties, India and LAC share perceptions about the global order and their role in it. Argentina, Brazil, India, and Mexico are members of the G20, an intergovernmental grouping which India will chair for the first time in 2023.

With Brazil hosting the G20 and the BRICS in 2024 and Argentina’s intention to join the BRICS, opportunities for policy coordination and economic cooperation arise.'

'The webinar offers a platform for government, social, and private sector professionals to exchange views on how to develop India-LAC relations. We hope this platform grows into a community around issues we must solve and advances collaboration among our countries,' she stated.

The LAC region was the main recipient of the India-UN Development Partnership Fund in 2021 ($20 million, 26 projects) and the region is also a critical supplier of minerals and hydrocarbons to India and a partner in the global energy transition with 12 countries participating in the Solar Alliance.

According to Manuel Gonzalo, Co-coordinator of the India-Asia working group, Argentinean Council for International Relations, 'Asia has emerged in global capitalism and India has a central role in pushing the US Indo-Pacific strategy. China-US competition at the global level has implications to India’s position in the Indian Ocean. Last week Gerardo Morales [Argentinian politician] said US must put the same money China is putting in LAC. Soft power has a role, but finance speaks high.'

During the round table discussion, he made observations and raised questions like: How to deal with the challenge of two giants playing in the region? Fuels are extremely relevant in the current context. Today LAC has a boon of lithium. What is the interest of Indian companies in lithium? What is the role of Indian SOEs in the energy sector?

Daniela Castro, Secretary of Research, Industrial Policy and Defense Production, Ministry of Defense of Argentina said: 'There is an opportunity for STI cooperation to produce defense equipment. Work agenda should include: (i) technology transfer; (ii) joint development and production of airplanes: and (iii) development of a knowledge ecosystem in the defense industry.'

'We have a very shallow trade agreement between India and Mercosur covering only 250 products. Is there space for increasing products in a way that we can generate important impacts in the trade agenda? IBSA has shifted from economic to cooperation in health, education, defense, and social protection. What are the key issues that should be pushed forward to bring IBSA back on track? Do you see India playing a role in debt restructuring in the G20? How can we use MDBs, especially the NDB, more effectively to push a developing country agenda in the G20 finance track?' asked Ivan Oliveira, Advisor, Ministry of Economy of Brazil.

During discussion, Raul Cano, Ambassador of Paraguay to the WTO, said 'Paraguay and India share the same values: democracy, human rights, and rule of law. Can India step up trade and investments in Paraguay to match those of Taiwan and (potentially) China mainland? Paraguay does not want to be just a commodity exporter, but to add value to its exports. There is room for cooperation in electro-mobility, solar energy, automobile, pharma, IT, petrochemicals,etc at both bilateral and Mercosur levels.'

Adding, 'Paraguay wants to build the partnership mentioned by Ambassador Reddy, receive investments, and generate employment. Focus should be given to nearshoring to add value to raw materials produced in Paraguay and looking into the Mercosur market.'

According to Gustavo Rojas, Program Officer, UN in Paraguay, 'It would be important to expand the range of products and the level of tariff preferences granted mutually by India and Mercosur. The limited supply of Indo-South Atlantic shipping routes should be discussed and analyzed too. Consideration could be given to including in this future agreement a multi-sectoral package of trade facilitation agreements, incorporating some of the innovative agendas that both parties have been promoting at the multilateral level in the WTO.'

'The creation of specific chapters on the treatment of non-tariff measures, local currency payment systems, and technical cooperation in agriculture could be innovative measures for expanding these flows in a sustainable way. It would be strategic to relaunch the Global System of Trade Preferences among Developing Countries by means of the entry into force of its latest protocol,' he stated.

'Mercosur’s regional automotive agreement, currently under negotiation, and CELAC’s sanitary self-sufficiency plan, approved this year, offer interesting regulatory frameworks for considering the construction of an Indo-Latin American productive integration strategy,' Gustavo Rojas added.

He suggested that IBSA should be revitalized and updated, with renewed emphasis on key issues such as food, energy, and health security and to make these actions feasible.

Responding to various concerns and questions, Indian Ambassador to Brazil, Suresh Reddy talked about various aspects of India in the region:

New partnerships in the region (Paraguay): According to the envoy India is not lookingto compete with China but build a strong partnership with the region. 'Willing to become your preferred partner in sectors of the economy. How to create employment and promote the productive sector, not just finance. Commodities go through cycles but if we have strong manufacturing etc it can offer alternatives during downward cycles.'

He urged Paraguay to send a team to India to look at the companies here and to establish relationships and to also reach out to big Indian companies and give them the confidence to invest.

Ambassador Reddy also said that India is not competing with US/China nor anyone. 'It is offering a hand because we share the same values and Indian companies are big enough to make a positive impact in job generation and other legacy. We are looking at the future and it will be a digital one. That is where India can build a strong partnership.'

He also talked about the economy: International Solar Alliance + sharing knowledge and finance in partnerships with countries like Brazil and Argentina. On Mercosur the envoy urged to understand what is happening in Argentina.

Australia-India signed an agreement recently which was concluded in six months, he said and is a case for LAC: keen to tap into the Indian market and commodity producer. Same was with the UAE and Mauritius. Discussions are going on with the UK to conclude soon, and Canada and the EU (December 2023).

About the webinar

Recently, the Center for African, Latin American and Caribbean Studies at OP Jindal Global University, FGV EAESP Business Administration School of São Paulo, and the Argentinean Council on International Relations co-hosted the webinar — India – Latin America Dialogue: Expanding Horizons.

What was the agenda?

Indian Ambassador to Brazil, Suresh Reddy, and leading experts and practitioners from Argentina, Brazil, and Paraguay discussed the main motivations and results of External Affairs Minister Dr S Jaishankar’s visit to Latin America and what it means for India’s foreign policy strategy towards the region. Experts also shared their perspectives on the opportunities for India-LAC cooperation and how to promote them.

The webinar reaffirmed the need for knowledge networks around common issues that the region is trying to solve and to advance collaboration among our countries. It also called the Indian embassies in LAC to host dialogues with the epistemic community to spread awareness and further build these knowledge networks.

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