Blink and you might miss Mahindra & Mahindra's operations in Uruguay. But the 16 pickup trucks arriving in pieces each month at a small assembly plant in Montevideo are the first wave in a tide of Indian exports heading for Latin America.

China's exports to the region were nine times India's last year, and its trade missions have received more press attention. But Indian auto parts, drugs, textiles, and machinery are beginning to make their mark in Latin markets. In the first six months of 2005, India's trade with Brazil nearly tripled over the previous year, to $1.1 billion, according to Brazil's External Commerce Secretariat. And India's exports to Mexico are up 15% through March, to $286 million.

Fueling the trade expansion are India's relaxation of rules for outward investment, its increasing appetite for raw materials, its success in developing a homegrown information-technology industry, and an economy growing roughly 7% a year. "Based on its success at supplying outsourcing services," says Mark Mobius, president of Templeton Emerging Markets, a mutual fund, "India could be a force in Latin America."

One of India's largest outsourcing companies, Tata Consultancy Services, has more than doubled its staff in Uruguay in the past three years, to 300, and has added 300 more employees in Mexico, Brazil, Chile, and Argentina. Indian firms have set up a dozen joint ventures in Brazil involving health care, IT services, and auto parts. And Indian pharmaceutical companies have found an attractive market in Mexico, where drug prices are among the highest in the developing world. Ranbaxy and Sun Pharma now sell drugs in Mexico in addition to exporting raw ingredients to local drug manufacturers. The draw? Meaty profit margins stemming from as much as 50% lower manufacturing costs in India than in Mexico, says Volker Adam, a consultant at the Jai Group in Mexico City.

Rengaraj Viswanathan, a senior official in the Latin American division of India's Ministry of External Affairs, says investment in the region could top $1 billion this year, up from about $20 million last year, "if a few deals solidify." Among them is the possible purchase of the Ecuadorian assets of Canadian oil company EnCana by India's Oil & Natural Gas Co.-for which several Chinese companies are competing as well. ONGC also signed an oil-exploration contract in Venezuela, in March. "Energy is a national-security issue, because we import 70% of our fuel," says Amitava Tripathi, India's ambassador to Brazil.

Deals for services are also solidifying. Ircon, India's railway construction company, is advising the world's largest iron-ore producer, Companhia Vale do Rio Doce in Brazil, on railway upgrades. "India's railroads are impressive," says Guilherme Laager, executive director of CVRD's logistics arm, which also supplies services for ports, railways, and distribution centers to Brazil's grain, paper, and chemicals industries.

The trade goes both ways. Tata International, the trading arm of industrial giant Tata Group, recently opened an office in Uruguay to scout buying opportunities. "We want to source commodities in which South America is rich," says Muralidharan, Tata's Uruguay manager. Dedini, a Brazilian company specializing in technology for sugar ethanol—a crop-based fuel that can power half of Brazil's new cars—is advising Indian sugar mills on ethanol production. And in June, Brazilian aerospace company Embraer clinched a $140 million aircraft-leasing contract with budget airline Paramount Airways, its first such deal in India.

Politics will be central to India's long-term success in Latin America. Brazilian President Luiz Inácio Lula da Silva wants to diversify the region's trading partners beyond the U.S. and Europe, where 70% of Latin American exports go today. Last year his country helped broker a trade pact between India and Mercosur, the South American trading bloc that includes Brazil, Argentina, Paraguay, and Uruguay. The pact, which takes effect later this year, will cut tariffs on 900 goods, including chemicals and steel parts.

Tie-ups between the two regions are not hassle-free. Latin Americans complain that India protects its markets with high duties. Indians complain about the same thing, particularly in Brazil, where strong unions, endless red tape, entrenched corruption, and high inflation and interest rates hamper investment. But both regions say they are better equipped than the U.S. and Europe to meet the needs of emerging economies. If Mahindra's baby steps in Uruguay are a sign, more companies from the subcontinent may soon follow.