India in Latin American Countries

No More LAC Of Interest Finally, India is paying due attention to deepening business links with Latin America countries. Now the governments must ensure efficient travel connections

It is strategically located in the meandering piece of land that connects the two Americas. Panama not only connects the two Americas, its eponymous canal also connects the Atlantic Ocean to the Pacific Ocean. Apart from connecting two continents and two oceans, Panama is at the heart of the grand possibility of bringing two huge emerging markets together. India and Latin America are poised to escalate their trade and investment linkages and Panama could play a crucial role here too. A direct flight to Panama could help India connect with key markets in central and southern America. As the governments talk to bring markets closer, industry is already building bridges between a continent and a sub-continent that are on opposite sides of the globe. The recent conclave on Latin and Caribbean (LAC) markets organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) reflected a rising desire for deeper collaboration. While there are natural complementarities between the two regions, lack of business facilitation and poor transport connection shave hindered capital flows. Indian investment of $8.4 billion in LAC is less than 1 per cent of what they received from the world. And LAC investment of$2.8 billion in India is just 1 per cent of FDI flows to India. In the last decade trade between India and LAC grew 25 per cent to$46 billion in 2012-13. But the 33 markets of LAC account for only six per cent of India’s global trade. This is a sorry situation at best and reflects India’s neglect of LAC markets. Indian diplomacy and industry has spent an inordinate time and effort on BRICS where a focused approach to LAC markets would have been more beneficial. Unlike BRICS which is not homogenous, LAC markets offer congruity and geographical synergies.This is not an argument for an either/or situation but rather a more targeted focus on LAC. Government and industry estimates that the trade can cross $100 billion in 5 years. “Latin American countries have not received due attention in the past but posses huge market potential…In order to secure an even larger share of LAC markets, India needs to strengthen its linkages,” says Dr A Didar Singh, Secretary General of FICCI.LAC countries are home to over 600 million people with a GDP of over $5.5 trillion. India can’t afford to ignore it as much as LAC can’t afford not to be here. The excitement between the countries is building up. Over 100 Indian companies have planned investments of over $12 billion in sectors like pharmaceuticals, IT, energy and automobiles. Hero Motor Corp is investing $70 million in a new plant in Colombia to cater produce two-wheelers for its markets in the region. TCS employs more than 8,000 professionals in 8 countries – Mexico, Ecuador, Colombia, Peru, Chile, Argentina, Brazil and Uruguay. EID Parry has acquired a pharma company in Chile and while Lupin Ltd has done the same in Mexico recently. The Barranquilla region of Colombia is aggressively seeking FDI from global markets. Colombia is among the top20 FDI destinations in the world. “We are keen to welcome Indian investment in our region which has excellent infrastructure for manufacturing and efficient port for accessing South American markets,” says Ana Maria Badel, director of Probarranquilla, the agency responsible for inviting FDI. Hurdles like talent mobility restrictions and trade barriers are being slowly reduced in LAC markets. For instance Argentina has recently allowed import of generic formulations for Indian pharmaceuticals companies. Global corporations from LAC markets are big players in India. Brazilian steel maker Gerdau employs 45,000 people at its plant in Andhra Pradesh, while Mexico’s Cinepolis is the third biggest player in movie theater industry in India. Cinema and tourism can play a critical role in acquainting the regions with each other. Ambassador of Bolivia to India Jorge Cardenas says, “We have some of the most beautiful natural regions in the world. Indians would love to discover Bolivia.” A simple step like shooting a Bollywood movie in Bolivia or Peru would ensure instant recognition of these countries for Indian tourists. This brings us back to the issue of connections. Travelling to any part of LAC from India requires at least two stop-overs. Surprisingly, India doesn’t have a direct flight to even Madrid that would help connect to LAC countries. Panama thus could easily bridge the divide to allow an explosion of business links if governments from both regions set their minds to ensure efficient flight connects.pranjal@businessworld.in@pranjalsharma