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Why Latin America​

October 13, 2014

By Deepak Bhojwani

Independent India has always punched above its weight diplomatically. The economic reforms of the 1990s provided the much needed economic weight to our stature. Bold diplomatic outreach, like the Look East policy, added substance to our status of emerging power. New Missions and Consulates, in Africa and elsewhere; enhanced relations with important countries such as China, Saudi Arabia, a resurgent Russia and others provided added momentum.

Prime Minister Modi’s government seized the baton this May from a flagging forerunner. The stretch run thus far has inspired us to expect another quantum diplomatic leap. The preference for substance over form is unexceptionable in established dealings with set agendas. The challenge is to set an agenda with countries and regions where our relations may be relatively trouble-free but under-exploited.

The thirty-three countries of Latin America and the Caribbean (LAC) present a diverse and complex diplomatic challenge. Geographic distance is complicated by a comparative lack of historic, cultural/linguistic, and diaspora connections that India shares with almost all other regions, in greater or lesser measure. We justifiably nurture the bond with Indian origin communities in the Eastern Caribbean. We need now to concentrate on Latin America, five times the size of India, with 600 million inhabitants enjoying a per capita income over US$ 11,000. Select Indian circles are aware of the region’s massive resource base of energy, minerals, arable land and biodiversity.

Pandit Nehru visited Mexico in 1961. Indira Gandhi’s odyssey to eight Latin American countries in 1968 stands out as the high point of Indian diplomacy with that region. A handful of subsequent PM level visits to that region have been primarily for multilateral events. More recently, we have had a few visits by Indian Presidents and Vice Presidents to Latin America.

PM Modi visited Brazil for the BRICS Summit last July,. He had bilateral talks with Brazil’s President but could not possibly avail the oportunity to personally meet all the eleven other South American leaders invited as guests. He nevertheless remembers meeting the LAC Heads of Mission in India twice. The MEA now has a Spl. Secretary dealing almost exclusively with Latin America and the Caribbean.

images/infocus3.jpgLeaders of BRICS countries and South American countries meet on the sidelines of ​ ​6th BRICS Summit in Brasilia, Brazil​ In the first five decades after our Independence, there were only thirteen Presidential visits from Latin America to India (Latin American Presidents are heads of State and Government). Over the past decade there have been a dozen. Several more requests could not be accomodated due to scheduling problems apparently.

The ‘Troika’ of Foreign Ministers of Chile, Venezuela and Cuba, representing the newly formed Community of Latin American and Caribbean States (CELAC) met our External Affairs Minister in August 2012. The Joint Declaration promised a new beginning in our relations with this pan-regional organisation, which brings all thirty-three countries under the same umbrella. In February this year India acquired observer status with the dynamic Pacific Alliance, comprising Mexico, Colombia, Peru and Chile. External Affairs Minister Sushma Swaraj met the quartet of Foreign Ministers representing CELAC in New York in September. In the coming days, she will receive the Foreign Ministers of Guatemala and Mexico in Delhi.

images/infocus2.jpgThe then External Affairs Minister with the then Minister of State Shri E. Ahamed & Foreign Ministers of Chile, Venezuela and Vice Foreign Minister of Cuba at the First CELAC Ministerial TROIKA meeting at New Delhi (August 7, 2012) While there is no question about the political interest that India’s status has aroused, an economically vibrant and self-confident Latin America is also reaching out to the world, primarily China and Russia. Presidents Xi Jinping and Putin visited three other countries each in the region, before and after the BRICS Summit. China’s Foreign Ministerial dialogue with the CELAC Quartet is being elevated to Summit level. China, Russia, and increasingly Japan, South Korea and ASEAN, are investing heavily all over Latin America. Why are they according such a high priority to this region? India’s own experience provides the answer.
India’s trade with LAC has grown exponentially this century, from less than US$ 2 billion in 2000-1 to approximately $46 billion in 2013-14. India imported almost $33 billion and exported around $13 billion worth. Most of our imports consist of crude oil, minerals and edible oils. Five Latin American countries account for almost twenty percent of our crude oil imports today. The gradual opening of these economies invites partnership by foreign investors. This is the model China has adopted. It is also being followed by Indian companies like ONGC, Reliance, BPCL, Videocon, Shree Renuka Sugars, Birlas and others.

India’s exports to Latin America have grown at a robust rate, despite recent volatility. Indian pharmaceuticals, automobiles, textiles, chemicals, machinery and other value added products have found dedicated customers all over the region. Indian companies - UPL, Godrej, Hero and others – have bought local companies or invested in greenfield projects. Over a dozen Indian software companies employ from a few dozen to several thousand software professionals in development and delivery centres all over Latin America. Latin America offers an essential alternative source for our fuel and raw material needs, and new markets for value-added exports of our goods and services, in an increasingly insecure and volatile international environment.

This has attracted sufficient attention for establishments on both sides to consider negotiating new, and deepening existing, preferential trade agreements. India’s geographic and other handicaps in Latin America can be partially overcome if we provide increased access for our exporters to Brazil, Chile, Peru, Colombia and several other promising markets. Currently our exports account for less than two percent of Latin America’s total imports. Lack of adequate air and maritime connections also hampers trade. We also need to ensure better connectivity to promote tourism. There is a desire to get to know and experience each other’s cultures being propagated by a vibrant Indo-Latin community.

Indian investment, estimated at $ 20 billion, has been slow to come to Latin America, when compared with Africa. This could be because of the distance, language barriers, lack of shared history and familiarity. Our engagement with Africa, however, has a lot to do with official attention and patronage. India hosts the third India-Africa Summit in 2015. A combined Summit with Latin American countries is not even on the horizon. India has committed $8.5 billion in project and related assistance to Africa, of which sixty-five percent has been disbursed. In contrast our development partnership with Latin America has accounted for less than $200 million till date. Much of this has been through direct cash donations or lines of credit to purchase Indian products. Indian companies understandably lack experience in executing projects in Latin America, unlike the Chinese.
This week, several Latin American delegations, some headed by Ministers, will be in Delhi for the India-Latin America Investment Conclave organised by FICCI. The mutual interest in trade and investment is beginning to receive official attention.
The political spin-offs are guaranteed. The reciprocal presence of institutions and companies on both sides, joint ventures, timely and focussed attention to a well organised calendar of bilateral visits, will ensure that India acquires a higher profile. We partner Brazil in IBSA and BRICS. We share platforms with Brazil, Mexico and Argentina in the G20, and with several like-minded LAC countries in climate change negotiations, WTO, etc. Regional groupings in South and Central America and the Caribbean serve as valuable interlocutors. These linkages, combined with the lobbies of Latin American companies investing in India, will strengthen India’s foundations in the region.

The absence of political disagreement with Latin America leaves the field open for positive engagement. The bridges we build will endure and enable Indian business and other interests to cross over and operate in that region with greater ease. The need to engage the LAC region bilaterally, collectively and concertedly, at all levels, as we have done with Africa and South East Asia, is evident.

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

[The author, a former diplomat was Ambassador of India to Colombia and Cuba. This article has been written exclusively for ‘In Focus” section of Ministry of External Affairs website,www.mea.gov.in ]images/download.jpg



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