Media Center

Spicy India, The Asian giant wants to increase its trade relations with Latin America

July 07, 2012

El Periodico (Guatemala) : Vernick Gudiel

It is not only the Indian food that is spicy, so are its culture, music and business. The sleeping giant has become an emerging power in the last three decades and begins to set its sights on Latin America, where it seeks business opportunities in the region. As part of a delegation of Latin American journalists I had the opportunity to visit India in late April at the invitation of its government, and to approach to emblematic companies such as TVS, Tata Consultancy Services, Hindustan Aeronautics, and learn about the development of this nation and its interest in Latin America.

Approach to Latin America

Rajeev Vijh, Latin America director of the Federation of Chambers of Commerce and Industry of India (FICCI), representing over 2.5 million companies, says the trade relationship between India and Latin America is still incipient, but there is great interest among Indian companies to invest in the region. Indian exports to Guatemala totaled U.S. $ 162 million in 2011, mainly vehicles, motorcycles, machinery, textiles and medicines, while Guatemala sold products worth U.S. $ 12.6 million, primarily cardamom, some wood, cardboard and scrap metal, according statistics of the Bank of Guatemala.

This level of trade is a negligible amount for this market of 1,258 million potential consumers, the second most populous country in the world behind China with 17.8 percent of the global population.

Not a country, a subcontinent

A study by Knight Frank and Citi Private Bank said that India will be the world's largest economy by 2050 and the world's most populous country in 2030, above China. However, Guatemalan exporters have great difficulty to leverage its expansion due to lack of knowledge of the Indian market, its 22 national languages and the distance, more than 15,000 kilometers, a journey of 26 hours by plane.

For Enrique Lacs, an expert on international trade, the main hurdle for selling to India is the lack of knowledge about the Indian market in Guatemala and the asymmetry between the sizes of the two markets. India is a major producer of agricultural and manufactured goods at a cost as low as China’s. Also, it does not have direct transport routes to Guatemala.

"The market is unknown to us, but I do not mean that there are no opportunities," says Lacs, who points an export strategy is being pursued along with the conducting of studies of market intelligence to see what we can sell and have an embassy and commercial office to investigate and make business prospecting.

India opened its embassy in Guatemala City short while back and Guatemala is about to open its own in Delhi in the coming months, when it has a place in the Indian capital.

Guatemala has limited production capacity to meet any huge demand, for example, if India wants 2 million tons of beans. According to Lacs, the right strategy would be to go for a niche market by city or by region. For example, Indian megacities like Bombay has 21.3 million inhabitants, Capital Delhi 18.3 million and Kolkata 15.4 million.

Attracting Indian capital

Lacs said that it is important to attract Indian investments into the country. They are beginning to export capital, they also have a great high-tech sector, software development, call centers, machinery, vehicles and medicines.

An Indian-owned company operating in Guatemala is the call center 24/7 Customer, which was installed in 2007 and employs over 3 000 people.

Vijh says that Indian companies seeking opportunities in sectors such as agribusiness, mining, renewable energy, health, tourism and hospitality.

Swami Kumar Rao, vice president of Tata Consultancy Services (TSC), technology and services division of TATA Group which employs more than 226 000 engineers representing 105 nationalities, said that they are always assessing the possibility of opening operations in the countries of Latin America.

TCS is one of the 10 largest technology firms in the world competing with giants like IBM, SAP, among others; it has development centers in Uruguay, Argentina, Brazil, Colombia, Chile and Mexico, which employ thousands of Latin American engineers. Kumar says it is not necessary to be great country to make investment, but one should have sufficient talent. In case of TCS investment in Uruguay, they arrived at the invitation of the Uruguayan Government.

(The views expressed above are the personal views of the author)

Write a Comment Write a Comment

Post A Comment

  • Name *
    E-mail *
  • Write Your Comment *
  • Verification Code * Verification Code