Indian trade with the region has increased twenty-fold since 2000, but is only 15% of the trade flow with China.
China's rapid trade, credit and investment spillover into Latin America in the first decade of this century suggested that India, if it intended to follow in the footsteps of its continental rival, could perhaps stage a similar landing in the second decade. This has not happened. India has certainly increased its economic relationship with the region, but it is far from that developed by China. Even the trade flows of Latin American countries are greater with Japan and South Korea, although it is foreseeable that in a few years they will be surpassed by those with India, given its potential. In an international context of confrontation between the US and China, India emerges as a non-confrontational option, also specialized in IT services, so necessary in a world that has discovered the difficulty of mobility by Covid-19.
article / Gabriela Pajuelo
Historically, India has paid little attention to Latin America and the Caribbean; the same had happened with China, apart from episodes of migration from both countries. But the emergence of China as a major power and its landing in the region made the Inter-American Bank of development (IDB) wonder in a 2009 report whether, after that Chinese push, India was going to be "the next big thing" for Latin America. Even if India's figures were to lag behind China's, could India become a player core topic in the region?
The relationship of Latin American countries with New Delhi has certainly increased. Even Brazil has developed a special bond with India thanks to the BRICS club, as evidenced by the visit that Brazilian President Jair Bolsonaro made in January 2020 to his counterpart Narendra Modi. In the last two decades, India's trade with the region has increased twenty-fold, from $2 billion in 2000 to nearly $40 billion in 2018, as a new IDB report found last year.
This volume, however, is far below the trade flow with China, of which it constitutes only 15%, because if Indian interests in Latin America have increased, to a greater extent the Chinese have continued to do so. Investment from both countries in the region is even more disproportionate: between 2008 and 2018, India's investment was $704 million, compared to China's $160 billion.
Even the Indian trade increase has less regional imbrication than the global figures might make it appear. Of the total $38.7 billion in transactions in 2018, $22.7 billion corresponds to Latin American exports and $16 billion to imports of Indian products. Indian purchases have already surpassed imports from Latin America by Japan ($21 billion) and South Korea ($17 billion), but they are largely due to the purchase of oil from Venezuela. Adding the two directions of flow, the region's trade with Japan and Korea is still higher (around $50 billion in both cases), but the potential for growth in the trade relationship with India is clearly greater.
There is interest not only from American countries, but also from India. "Latin America has a young and skilled work force, and is an area rich in natural and agricultural resource reserves," said David Rasquinha, director general of the Export-Import Bank of India.
Last decade
The two IDB reports cited above are a good reflection of the leap in relations between the two markets in the last decade. In the 2009 report, under degree scroll "India: Opportunities and Challenges for Latin America", the Inter-American institution presented the opportunities offered by contacts with India. Although it was committed to increasing them, the IDB was unsure about the evolution of a power that for a long time had opted for autarky, as Mexico and Brazil had done in the past; however, it seemed clear that the Indian government had finally taken a more conciliatory attitude towards the opening of its Economics.
Ten years later, the report graduate "The bridge between Latin America and India: Policies to deepen economic cooperation" delved into the opportunities for cooperation between both actors and noted the importance of strengthening ties to favor the growing internationalization of the Latin American region, through the diversification of trade partners and access to global production chains. In the context of the Asian Century, the flow of exchange trade and direct investment had increased exponentially from previous levels, result largely due to the demand for Latin American raw materials, something that is often criticized, since it does not promote the region's industry.
The new relationship with India presents an opportunity to correct some of the trends in the interaction with China, which has focused on investment by state-owned companies and loans from Chinese public banks. In the relationship with India, there is a greater participation of Asian private initiative and a commitment to new economic sectors, in addition to the hiring of indigenous staff , including at the management and management levels.
agreement According to General Manager of the IDB's Integration and Trade Sector, Fabrizio Opertti, it is crucial "the development of an effective institutional framework and business networks". The IDB suggests possible governmental measures such as increasing the coverage of trade and investment agreements, the development of proactive and focused trade promotion activities, boosting investments in infrastructure, promoting reforms in the logistics sector, among others.
Post-Covid context
The questioning of global production chains and, ultimately written request, of globalization itself as a result of the Covid-19 pandemic, is not conducive to international trade. Moreover, the economic crisis of 2020 may have a long-lasting effect on Latin America. But precisely in this global framework the relationship with India may be especially interesting for the region.
Within Asia, in a context of polarization over the geopolitical interests of China and the United States, India emerges as a partner core topic , one might even say neutral; something that New Delhi could use strategically in its approach to different areas of the world and specifically to Latin America.
Although "India does not have pockets as deep as the Chinese", as Deepak Bhojwani, founder of the consulting firm Latindia[1], says in relation to the enormous public funding that Beijing manages, India can be the origin of interesting technological projects, given the variety of IT and telecommunications companies and experts it has. Thus, Latin America can be the object of the "technology foreign policy" of a country that, from agreement with its Ministry of Electronics and IT, has the ambition to grow its digital Economics to "one trillion dollars by 2025". New Delhi will focus its efforts on influencing this economic sector through NEST (New, Emerging and Strategic Technologies), promoting a unified Indian message on emerging technologies, such as data governance and artificial intelligence, among others. The pandemic has highlighted Latin America's need for more and better connectivity.
There are two prospects for the expansion of India's influence on the continent. One is the obvious path of strengthening its existing alliance with Brazil, within the BRICS, whose pro tempore presidency India holds this year. That should lead to a more diversified linkage with Brazil, the region's largest market, especially in scientific and technological cooperation, in the fields of IT, pharmaceuticals and agribusiness. "Both governments committed to expand bilateral trade to US$15 billion by 2022. Despite the difficulties brought by the pandemic, we are pursuing this ambitious goal", says André Aranha Corrêa do Lago, Brazil's current ambassador to India.
On the other hand, a greater effort could be made in bilateral diplomacy, insisting on pre-existing ties with Mexico, Peru and Chile. The latter country and India are negotiating a preferential trade agreement and the Bilateral Investment Protection Treaty signature . A rapprochement with Central America, which still lacks Indian diplomatic missions, may also be of interest. These are necessary steps if, closely following in China's footsteps, India wants to be the "next big thing" for Latin America.
