Latin America will continue its growth in 2012- ECLAC Report

• The Latin America and the Caribbean (LAC) region had a GDP growth of 4.3% (estimate) in 2011 and is projected to grow by 3.7% in 2012 despite the continuing crisis in Europe, uncertain outlook in USA and the slow down of the Asian markets.

Both Imports and exports of LAC crossed the trillion dollar mark in 2011. Imports increased by 23% to 1.038 trillion dollars.

Foreign Direct Investment leaped to a record level of 130 billion dollars from 75 billion in 2010.

Foreign exchange reserves increased to 761 billion dollars as of October 2011 from 655 billion dollars in 2010.

The total external debt as a percentage of GDP declined to 19.2% in 2011 from 20% in 2010. The fiscal accounts of Latin America closed in 2011 with a small primary surplus.

These are the highlights of the 21 December 2011 report of the Economic Commission for Latin America and Caribbean ( ECLAC) based in Santiago. More from the report as follows.

GDP growth projection in 2012

Latin America and the Caribbean GDP is projected to grow by 3.7% in 2012 . South America is expected to grow by 3.9% and Central America by 3.5%.

The highest growth is projected for Panama (6.5%) followed by Peru and Ecuador at 5% each. Brazil is expected to grow by 3.5%, Mexico by 3.3%, Argentina by 4.8%, Colombia by 4.5%, Chile by 4.2% and Venezuela by 3%. El Salvador has the lowest growth projection of 2%.

GDP growth in 2011

The provisional GDP growth of LAC is estimated to be 4.3%. South America had grown by 4.6% and Central America by 4.1%. Panama had the highest growth of 10.5%. Argentina grew at a Chinese rate of 9%, in 2011 slightly down from its impressive 9.2% growth in 2010. Brazil, the largest Latin American market grew by 2.9% while the second largest market, Mexico grew by 4%. Colombia had increased its growth to 5.5% in 2011 from 4.3% in 2010. Peru had grown by 7% in 2011, down from 8.8% in 2010. Chile had increased its growth to 6.3% in 2011 from 5.2% in 2010. Venezuela recovered from its recession in 2009 and 2010 and showed positive growth of 4.2% in 2011.

The main driver for the growth is domestic demand and underpinned by high commodity prices and demand.

Trade

Both imports and exports of goods of LAC crossed the trillion dollar mark in 2011. The imports in 2011 reached 1.038 trillion dollars increasing by 23.5% from 846billion in 2010. Exports increased by 23.1% to 1.097 trillion dollars from 891 billion dollars in 2010. Among the major countries, Brazil´s imports increased to 228 billion dollars in 2011 from 182 billion dollars in 2010. Mexican imports in 2011 reached 352 billion dollars from 302 billion dollars in 2010. Argentine imports increased to 71 billion dollars in 2011 from 54 billion dollars in 2010.


Foreign Exchange Reserves

Foreign exchange reserves swelled by 106 billion dollars reaching a record 761 billion dollars as of October 2011 from 655 billion dollars in 2010. Argentina was the only major country which lost (5 billion dollars) reserves in 2011. Brazil's forex reserves were the highest with 353 billion dollars followed by Mexico-141 bn, Peru- 49 bn, Argentina-48 bn, Chile- 39 bn and Colombia-33 bn.

Foreign Direct Investment (FDI)

The FDI reached a record level of 130 billion dollars in 2011 jumping from 75 billion in 2010. Brazil attracted 81 billion dollars in 2011 from 37 billion dollars in 2010. FDI in Mexico reached 9.8 9.8 billion dollars in 2011 from 6.2 billion dollars in 2010. FDI in Argentina fell to 3.9 billion in 2011 from 6 billion dollars in 2010. Peru was the third largest destination of FDI with 7.3 7.3 billion dollars in 2011. Chile received 5.9 billion dollars, Venezuela 3.6 billion dollars and Colombia 2.6 bn. It is noteworthy that Costa Rica had attracted 1.76 billion dollars of FDI in 2011 and had consistently been receiving over one billion dollars of annual FDI since 2006. Dominican Republic, Uruguay and Panama are the other small countries which have also been receiving over one billion dollars of annual FDI since 2005.

External Debt

The total external debt as a percentage of GDP declined to 19.2% in 2011 from 20% in 2010. Since 2010, the bulk of the debt of the government across most of the region has been domestic, in clear contrast to the situation in the past when external debt was more. In the case of Brazil, the ratio of external debt to GDP is 12.8% while for Mexico it is 18.3%, Colombia-21.3%, Peru-23.8%, Venezuela- 28.6%, Argentina- 31.5%, and Chile- 40.9%. The highest is in the case of Nicaragua, which is 56.7% but even this is very low in comparison to that of USA and many European countries. The total external debt of LAC stood at 1.03 trillion dollars in July 2011. Brazil's debt was 291 bn $, Mexico-206 bn, Argentina-133 bn and Chile- 98 bn.

Inflation

The average rate of inflation of the region increased marginally to 6.9% in 2011 from 6.5% in 2010. But it is expected to decline in 2012. It may be noted that the rate of inflation has remained in single digit since 2003. In 2011, Only Venezuela and Argentina had inflation in double digits.

Fiscal Policy

The fiscal accounts of Latin America will close 2011 with a primary surplus of 0.3% after last year´s deficit of 0.3%. The overall deficit declined on average from 1.9% of GDP in 2010 to 1.5% in 2011. This slight improvement was the result of an increase in revenues of 0.4% of GDP, while spending remained nearly constant as a proportion of GDP. Most countries reduced their deficits, transformed them into surpluses, or expanded existing surpluses.

Exchange rates

In the first ten months of 2011, currencies of 11 countries in the region had appreciated but the trend has reversed since then.

Risks and Challenges

What will be the impact of deterioration of the European crisis?

Impact on Latin American exports will not be significant since Europe accounts only for an average of 13% of Latin American exports. Brazil is dependent upon Europe for 23% of its exports, Chile 21% and Argentina 17.8%. Mexico will be least affected since only 5.3% of its exports go to Europe. However, Latin American growth will slow down if the situation in Europe deteriorates further dragging the world into another crisis.

Slowdown in the US market will affect Mexico which is dependent upon USA for 80% of its exports. It will also impact Central America from whom US is the destination of about 40% of exports.

But the good news is that the Latin American policy makers are well prepared to deal with external shocks, having gone through such situations in the past and having learnt lessons from them. It may be recalled that the region rebounded more rapidly than expected from the impact of the 2008/2009 crisis. Most of the countries of Latin America find themselves in a reasonably well placed in macroeconomic terms to cope with the expected deterioration in the global economy and are in a strong position to weather external shocks of the kind a deepening of the debt crisis in the euro zone is expected to bring. Compared with many of the more developed countries, levels of external and public debt in the region are low and international reserves are high.

Latin America is in a happy position to say.. cheers 2012 ! This is also reconfirmation of the Decade of Growth for the New Latin America.

The New Latin America and The New India - seminar

¨Palabras de Pasion¨ ( words of passion) was the title of my opening speech in Spanish.

I said,

-The New India is the one in which a TCS nerd has the nerve to tell God ¨Why dont you outsource your mandate? TCS will do it at half the cost and twice the efficiency

- The New Latin America is the one which does not tremble when IMF officials visit. Now it is the IMF which trembles while requesting Brasil for funds to rescue Europe.

- The New Latin America sings

Dejanos imaginar

que no existe el pasado

que nacimos el mismo instante en que nos conocimos

Let us imagine

that there was no past

that we were born at the moment in which we met each other..

-India is more than a commerical partner for Latin America. It is a democratic partner with spiritual synergy ( Bikini- Bindi ) and cultural complementarity ( Soya and Yoga)

- Latin Americans come back from visit to india with their spirit and soul enriched. Indians return from Latin America...happier and younger. Some do not return...stay on ..fall in love .. and marry Latin Americans..

Full speech of 18 minutes in Spanish in Youtube

This seminar is the first of its kind. It is the first one which has covered commercial, economic, political and cultural aspects of the relations between India and Latin America comprehensively. We had put together economists, policy makers, businessmen, academics, diplomats and a journalist on the dais. The focus was on the future...promise and potential. Not wasting time on the forgettable past.

Osvado Rosales of ECLAC ( Economic Commission for Latin America and Caribbean based in Santiago - our partner in organising the seminar) released a new publication ¨India and Latin America and Caribbean- Opportunities and Challenges in trade and economic relations¨ This is the first- ever ECLAC publication on India. Here is their Press Release.

India could become an important trading partner for Latin America and caribbean

Their Press Release got wide coverage in Latin American media as well outside. The full report in their website.

Marisol Argueta, Head of Latin America and Senior Director of World Economic Forum ( former foreign minister of El Salvador) talked about ¨Latin America- the decade ahead¨ and recalled the conclusions of the last WEF Latin America Summit held in Rio in April 2011 which were optimistic about the prospects in this decade. She exhorted the Latin American policy makers to make use of this historic opportunity by focussing on education, innovation, poverty alleviation, infrastructure and policy reforms.

Mr Samuel Guimaraes, the High Representative of Mercosur and ex-vice foreign minister of Brasil spoke ( humour and irony about IMF and some hard truth about China too) on India- Mercosur partnership.

Horacio Salvador from the Argentine foreign ministry highlighted the common approaches of Argentina and India in multilateral economic issues.

Jai Shroff, CEO of UPL, is planning to increase his agrochemicals and seed business in Latin America from the current turnover of 350 million dollars to a billion in the next 4 years. He is a prime example of the new mindset of Indian entrepreneurs who are going global with confidence, vision and optimism.

In the business session, the five Indian speakers

-were upbeat about the opportunities in Latin America

-outlined their plans for more investment and expansion of business

-expressed happiness with the Latin American human resources

-highlighted the cultural aspects of interaction between Indian and Latin American staff.

Arvind Sharma from Punjab who is settled down in Santa Cruz, Bolivia for the last 20 years, talked about the 2 billion dollar Jindal iron ore mining project.

Satya Muley who has built up from scratch a 50 million dollars business of adhesives and chemicals for Pidilite exuded confidence about his Brasil-expertise. He is a Guru for those who want to know the ropes of doing business in this large but complicated market. Brasil, they say, is not for beginners...

GV Mani was happy with the quality of Argentine human resources for the high-end financial research business of Crisil which wants to recruit more people.

Kapil Gulati wants to increase his business of lighting equipments to 600 million dollars from the current 200 million in the region.

Ram Karuturi has no business in the region..yet. He seeks South American expertise, technology, equipments and partnership for farming of his 300,000 hectares of land in Ethiopia.

Gabriel Rozman, the uruguayan wizard behind the success of TCS in Latin America ( employing 7000 Latin Americans in 8 countries ) inspired the audience with his humorous anecdotes and was proud of his association with Tata the legendary group of India.

Gustavo Grobocopatel's eyes were shining while he talked about the huge potential for South America ( lot of fertile land, abundant water, best practices, professional, scientific and large scale commercial farming) to supply protein and food requirements of India ( growing population and food consumption but losing agricultural land, water table going down, constraints of small scale farming) in the long term. Gustavo is called as the King of Soya and pioneer of APO- Agri Process Outsourcing. Playing on his name, he claims(jokingly) to be a relative of Sardar Vallabhai Patel !! For sure, he is Gujrati in his enterprising spirit.

Left to right- Arvind Sharma ( Jindal Steel Bolivia), Ram Karuturi ( Karuturi Global- largest cut rose producer in the world), Satya Muley ( Pidilite Brasil), Sergio Suarez ( Ayurvedic specialist and more Indian than me), Gabriel Rozman (TCS), GV Mani ( Crisil), Kapil Gulati ( Havells Sylvania) and Gustavo Grobocopatel ( Los Grobo Group).

Jorge Heine, who is writing a book on India ( to be released in the first half of 2012) and who was the Chilean Ambassador to India, talked about the unique aspects and advantages of India over China.

Oliver Stuenkel, the professor from Getulio Vargas Foundation, Sao Paulo

- One cannot understand India using the western norms and theories. India's democracy, growth and promise defy conventional wisdom.

Siddharth Varadarajan, Editor The Hindu

- India's rise as a power is peaceful unlike the old powers which wanted to dominate and caused wars. India and Latin America should work together in setting global agenda ( to the extent possible) rather than reacting to the agenda of the fading old powers who try to manipulate.

Raul Rivera, author of the new book ¨Nuestra Hora ¨ ( our time ), who was the last speaker mesmerised the audience with his unconventional and humorous comparison of Latin America with the rest of the world. He entertained the audience with his wit, satire and colourful language.

Left to right: Raul Rivera ( Chile), Oliver Stuenkel ( Brasil), Jorge Heine ( Chile) and Siddharth Varadarajan ( India)

We raffled 4 Qatar Airways tickets to India among the participants in the seminar and the guests at the Gala evening. The seminar has stimulated new enthusiasm, energy and vision among Indians and Latin Americans about the growing win-win long time partnership based on cultural and spiritual bonds.

The seminar was followed by a cutural programme with Rabindra Sangeet and Manipuri groups which came from India. While the Argentine artistes danced Bharatnatyam, Kuchipudi and Bollywood dances, an Indian Sharukh Merchant danced Tango. Cultural complementarity...

The India- Latin America spiritual synergy flourished in the cocktail with the wine made by a Vietnamese- speaking, French passport-holding Pondicherry Tamil Aziz Abdul in his winery in Mendoza, Argentina.

¨The New India and the New Latin America – Synergies and Complementarities¨ Seminar on 5 December 2011

India is the fastest growing democratic free market set to be the world´s third largest economy in the next three decades. Latin America too has undergone a paradigm shift and 2011 is said to be the dawn of the ¨Latin American Decade¨. The two sides, in their latest reincarnations as The New India and The New Latin America, have synergies and complementarities for growth and prosperity.

¨India : Latin America´s next big thing ?¨ was the title of the study published by the Inter American Development Bank (IADB) in 2010. India represents more than just investment and trade for Latin America The growth story of India within a pluralistic democracy amidst a vast diversity resonates among Latin American democracies. India adds value to Latin America by its spiritual and cultural richness and the Indians and Latin Americans bond with each other easily.

Bilateral trade in 2010 was 23 billion US dollars. India has invested 12 billion US dollars in the region in sectors such as IT sector, pharmaceuticals, agro-chemicals, energy, mining, steel and manufacturing employing 35,000 Latin Americans.

What is the scenario of India and Latin America in the coming decades? What are the new complementarities and synergies? How can they be leveraged for mutual growth? What are the challenges? What should be the strategies? What could they learn from each other from their successes, failures and best practices? What makes Indians and Latin Americans bond with each other? These will be discussed and analysed by economists, policy makers, businessmen and intellectuals in the proposed seminar, which is the first event of its kind to look at all aspects comprehensively.

Programme

1400 hrs. Arrival of guests

1430 hrs. Ambassador Viswanathan ¨Adding passion to the Synergies and Complementarities¨

1450 hrs. Osvaldo Rosales, Director of International Trade and Integration, ECLAC ¨Latin American economies - an overview¨

1510 hrs. Jai Shroff, CEO, United Phosphorus Limited (UPL) ¨The new mindset of Indian entrepreneurs¨

1530 hrs. Ambassador Horacio Salvador, Director General, Ministry of External Affairs of Argentina

1540 hrs. Samuel Pinheiro Guimaraes, Secretary General, Mercosur, Montevideo

¨India-Mercosur Partnership¨

1600 hrs. Marisol Argueta de Barillas, Senior Director – Head of Latin America, World Economic Forum ¨Latin America - the decade ahead¨

1620 – 1630 hrs. Coffee break

1630 -1800 hrs. Session on India- Latin America business

Moderator: Dr. Sergio Lais-Suarez, Honorary Consul of India, Cordoba

Speakers:

1. Gustavo Grobocopatel, President, Los Grobo Group,

Argentina

2. Kapil Gulati, Director for Americas, Havells Sylvania, San Jose, Costa Rica

3. G.V. Mani, Senior Director, CRISIL, Mumbai

4. Gabriel Rozman, Executive Vice-President, TCS , Mumbai

5. Satya Muley, CEO, Pidilite Brasil, Sao Paulo

6. Ramakrishna Karuturi, founder &Managing Director, Karuturi Global, Bangalore

7 Arvind Sharma, Director Jindal Steel, Santa Cruz, Bolivia

1800 – 1810 hrs. Coffee break

1810 - 1920 hrs. Session on the markets and mindsets of the New India and New Latin America

Moderator : Dr. Jorge Heine, Distinguished Fellow, Centre for International Governance Innovation, Waterloo, Ontario

Speakers:

1. Oliver Stuenkel Assistant Professor, Fundaçao Getulio Vargas (FGV), Sao Paulo

2. Mr. Siddharth Varadarajan, Editor, ´The Hindu´ newspaper of India, Chennai

3. Raul Rivera, President, ForoInnovacion, Santiago

1920 hrs. Raffle of two Qatar Airways tickets to India

1930 – 2100 hrs. Indian classical music & dance, Bollywood and Tango (by an Indian) Dances

2100 – 2230 hrs. Cocktail

The seminar is being organized by the Embassy of India in Buenos Aires in collaboration with the Economic Commission for the Latin America and Caribbean (ECLAC) based in Santiago (Chile).

The Seminar is part of the IV Festival of India 3-13 December, organized by the Embassy. This includes performances by Indian classical music and dance groups, bollywood dance by Argentines, food festival, yoga and meditation sessions, film festival, tourism workshops, painting and photo exhibitions, cultural seminars, handicraft exhibition by 50 Indian companies and India Cup golf tournament.

Singh is King ....in Argentina

I wrote a blog in 2009 describing Simmarpal Singh as the Peanut Prince of Argentina.

http://businesswithlatinamerica.blogspot.com/2009/05/simmarpal-singh-peanut-prince-in.html#links)

The prince has now become a king. He has a kingdom of 20,000 hectares of peanut farms. He is growing soya and corn in 10,000 hectares. He is now into rice. This year he has leased 1700 hectares of land in Concordia in the Entre Rios province for rice cultivation. His target for farming in Argentina is atleast 100,000 hectares....

I visited his rice farms on Thursday 3 November with him. I saw the process of planting of rice. As in the case of other crops, the Argentines use the No-Till method, also called as Direct Seeding. The seeds are directly planted in the land with the direct seeding machines. The fertiliser containing nitrogen, potassium and phosphorous is also added into the same hole where rice is put. They do not follow the Indian practice of ploughing the land nor the method of developing a nursery first and then transplanting the rice plant. They spray glyphosate herbicide to kill the weeds before planting rice. The spraying is done from an aircraft. They prepare a kind of embankment after every three metres to hold the water evenly in the parcel of the land which comes in very large pieces. They use a special equipment for making the embankment of mudwalls. Then they start watering the rice field with ground water pumped by a motor. The water pump works almost non-stop for 90 days till the rice seeds ripen. They have water pumps for every 70 hectares and there is a person to take care of the watering for every 140 hectares.

But the watering of the fields is expensive, costing almost 500 dollars per hectare due to the high cost of diesel. There is a proposal to electrify the motors with a World Bank loan. When this is done the cost will come down. At present the total cost of rice cultivation is 1800 dollars per hectare.

After the harvest, the paddy is dried and stored in the huge silos of a rice mill. The paddy is milled into rice and packed in 100 kilo bags for exports.

Coming from a small farming family, the Argentine cutivation appeared to me more like a civil engineering project with heavy machines, huge land parcel and high cost.

Here is a field with 25-days old rice plants

This is a direct seeding machine which plants 12 rows at a time

The Argentine yield per hectare is 7 tons, which is double that of India. Argentina produces about 1.5 million tons of rice of which one million is exported. Simmarpal's objective is to export the rice. His company Olam ( based out of Singapore and run by persons of Indian origin ) is one of the major rice traders of the world.

Simmarpal has now gained sufficient expertise and confidence in farming in Argentina. His company Olam has recognised this and is encouraging him to go for more acreage and scale up the operations.

Simmar's and Olam's ambition coincides with those of the Entre Rios government which wants to increase the rice acreage and production. The government sees value addition to the province by Olam which contributes to production,exports, employment and human resource development. The Entre Rios province has large uncultivated tracts of fertile land with plenty of water since the province is located between the large Parana river on one side and the Uruguay river on the other side. Besides rice, there is cultivation of blueberries, soya, wheat, citric fruits and even eucalyptus plantations in the province.

I discovered one of the secrets of success of Simmarpal but at a high cost to my comfort. He made me leave Buenos Aires by car at 6 am in order to reach Concordia by 1030 am and join a conference call with his colleagues at 11 am. He inflicted the same pain on return too. We left Concordia at 6 am to enable him to attend a meeting at 11 am in Buenos Aires. I wanted a short break after the long four hour journey but he did not need and plunged straight into work.

Simmar had himself driven 36,000 kms during his first six months of his arrival in 2005 in Argentina to look for farms, recruit people and supervise the operations. Now with the luxury of a chauffeur-driven vehicle, he works in his blackberry, iPad and laptop non-stop.

I was impressed by this Indian-style hard work and also the pleasant Latino way in which he manages his Argentine employees. He has cultivated commendable rapport with the Argentines in the same efficient way with which he cultivates the land. The Argentines admire this young Indian's dynamism and adore his turban, thinking that he is a Maharaja.

Gammon India invests in Ecuador

I had known Gammon India as an engineering and construction company when I was posted in Libya in 1983-85. I was pleasantly surprised to see that they have diversified into petroleum and other sectors and have even entered Latin America.

Gammon has established a subsidiary company Campo Puma Oriente SA ( based in Panama ) which operates the Puma oil fields in Ecuador which consists of eleven wells with proven reserves of 8 million barrels. So far, they have drilled seven wells which produce 1,500 bpd. The contract for the 20-year lease of Puma fields was signed in March 2008.

The Puma field investment is a joint venture with Joshi Technology International of USA. Gammon has 66.4% and Joshi 33.6%. The joint venture company in Ecuador is called as Consorcio Pegaso They have invested 50 million dollars till December 2010 and plan to invest 51 million dollars more in the next five years.

Joshi company, founded by Dr Joshi produces 5000 bpd of oil in Colombia. They also have oil fields in India and USA.

The Puma block is in the orient basin located 400 km from the capital Quito. The block has an area of 166 sq kms.

According to a June 2011 Reserve Bank of India report, Gammon has invested 1.8 billion dollars in their Panama subsidiary which will diversify into agriculture, fishing, hunting and forestry. Hmm.... Interesting ...

Argentine company Arcor entering India

Last April, when I was in Trichy, the nearest town to my village, I went to a small supermarket to buy chocolates for the kids in my place. The kids liked the chocolates and thanked me for bringing them all the way from Argentina. I was taken aback and sheepishly confessed that I had bought them in Trichy. But they showed me the label ¨Made in Argentina¨. Yes. These were in fact made in Argentina and exported to India by an Argentine company Arcor. Last year their exports to India were 10 million dollars.

The CEO of Arcor Mr Luis Pagani is right now in India on a two-week tour. He had an interactive meeting organised by CII in Delhi. He is also visiting Mumbai and Bangalore. The purpose of his visit is to open an office in Delhi in the next few months. Later, Arcor is planning to establish a plant in India to manufacture for the Indian market and for exports to rest of Asia. They are looking for a site in India to put up the plant. This will be the first ever Argentine investment in India.

Arcor is an Argentine multinational company exporting to 120 countries. They are a leader in Latin America and have 41 plants in five countries of the region.It is a family-owned company with a turnover of 2.5 billion dollars.

Wipro of India had done some IT work for Arcor.

Mr Pagani has two guides to show him around in India. His sister and daughter. Both have travelled to India many times and like Indian culture and spiritualism.

Argentine hair colour for Indian men

Last year Godrej bought two Argentine hair colour companies ( Issue Group and Argencos ) for about 50 million dollars. These two companies are doing well in the local market and are also exporting their products to other Latin American markets. The entry of Godrej into Latin America is not surprising, given the global ambitions of this large and established firm.

What took me by surprise was when I came to know that a small Argentine company Plumari has entered the Indian market with men's hair colour products. The Plumari products are sold in the Mens & Boys retail stores in India. At the moment, the Indian company has six retail outlets but is planning to open 100 stores by 2016. Plumari is keen to market their products for women also in India. They are excited by their entry into the large, growing and promising market of India.

Plumari is a family-run company with a turnover of 30 million dollars. They specialise in hair colour and export their products to over 30 countries. . More information in http://www.plumari.com

The success of Plumari should be an inspiration for other small Argentine and Latin American companies. This should also be seen in the context of the comments by some Latin American and other economists that Latin America is dependent upon exports of primary commodities. The Latin American companies which have consumer products should explore the large Indian market seriously and systematically.

A Brazilian company Surya Brasil is already exporting their Henna products to India. My blog on this http://businesswithlatinamerica.blogspot.com/2010/11/surya-shines-in-brasil-exports-henna-to.html#links

Brazil and India - Synergy between Bikini and Bindi

A Brazilian firm with an Indian name ¨Surya¨ is marketing its henna products in India. Renuka, an Indian company is a major producer of sugar in Brazil.

Clélia Cecilia Angelon, the president of Surya Brasil and Narendra Murkumbi, vice chairman of Renuka Sugars are the trendsetters in the new paradigm of synergy between the New Brazil and the New India. Economists of the old school used to consider Brazil and pre-reform India as more competitive than complementary to each other.

Cecilia started off with a shop in Sao Paulo selling henna powder made with raw materials imported from India. To make it look authentic she named her company Surya Henna. She had once invited me to her stall in a Cosmetics Fair which drew large crowds attracted by the scantily clad Brazilian beauties tattooed all over their bodies with henna. I realised then that India not only stirred the Brazilian soul with spiritualism but also gave a touch to their bodies as well. This combination convinced me that it was going to be a winner in business and win-win for India and Brazil. The turnover of the company, which changed its name to Surya Henna, has now reached twenty million dollars. They export to twenty countries including USA, Australia, UK and France. In an audacious move, Cecilia decided to export her henna products to India. The marketing team of the company thought this was like a Brazilian trying to teach an Indian Guru. How would the Indian consumers living with a long tradition of henna accept a Brazilian henna product? How could a Brazilian company find a place in the space crowded by so many Indian companies in their home market? Cecilia would not take no for an answer. She opened an office in India in 2005 and sent a marketing executive Fernanda Drumond who spent four years to study and understand the Indian market. She has achieved sales of 1.5 million dollars in 2010 and plans to double it in 2011. She has placed the products in beauty parlours and stores in shopping malls in the major cities. Now she is reaching out to the smaller towns. Surya Brasil plans to open a production plant in India from which it will export to Japan, Korea, Taiwan, Australia and other Asian countries. They also plan to open an organic SPA in India like the one they have in Brazil. Besides henna Surya uses in their cosmetic products other Indian ingredients such as Amla.

Surya goes beyond henna in its India connection. The company´s website says ¨Surya is guided by Ayurvedic principles: know and respect individuality; pursue well being with emotional and physical balance¨. The website of Surya has a section, ¨moment of meditation ¨.

How does one explain the success of Surya in India and in the world? The answer lies in the fact that the Brazilians, with their sensual expertise, understand and practice body care better than the Indians whose focus is more on the spirit and the soul.

Cecilia’s interest in henna started with her love for an Indian Raj Malhotra who had employed her as a salesperson in his shop in London. Raj could not resist the Brazilian charm and married her. She became Cecilia Malhotra. They had a daughter Vandana. Raj lived for some time in Sao Paulo. After a few years, Raj and Cecilia separated. Later, she had relationship with another Indian Kanwaljit Singh.

When Murkumbi wanted to enter the Brazilian sugar sector, it was like Cecilia trying to penetrate the Indian henna market. Sugar industry was the holy cow of Brazil. It was controlled by the sugar barons and traditional families of Brazil. They were formidable as the global leaders in sugarcane farming, sugar and ethanol production and the pioneers in the use of fuel ethanol and flexifuel vehicles. But Murkumbi who believes in ¨Rewriting rules and Reinventing paradigms ¨ and ¨contrarian philosophy in a conventional business¨ ventured boldly . He has acquired two Brazilian sugar groups with an investment of 350 million dollars. Renuka is now the seventh largest producer of sugar in Brazil with a cane-crushing capacity of 14 million tons a year in its four sugar mills. It is also a leading producer of ethanol (one million litres) and co-generated power (221 MW). Renuka is investing 70 million dollars in 2011-12 more to expand the capacity. The goal of Murkumbi is to take the company from seventh to third rank in Brazil.

Murkumbi sees strategic synergy between India, the largest sugar consumer and Brazil, the largest sugar producer in the world. He believes in the complementarity between India whose sugar production faces increasing challenges of agricultural land and water scarcity and the advantage of Brazil with ample land and water resources, conducive climate and efficient farming and manufacturing, low operating cost and high scalability. Murkumbi has also become successful in marketing the Brazilian sugar in many countries besides India.

From time to time Indian domestic production goes down due to weather and other cyclical circumstances which make India import sugar. In 2009-10 India imported 2 billion dollars of sugar from Brazil.

The success of Cecilia and Murkumbi have become inspiration for other Indian and Brazilian entrepreneurs to seek such win-win opportunities.

India imported from Brazil soya oil worth 71 million dollars and pulses worth a few million dollars in 2010. These two imports are likely to increase in the coming years since India's production of these two items are inadequate to cope with the growing demand.

There is an evolving agricultural complementarity between Brazil which is poised to become a global agricultural powerhouse and India which is likely to face more challenges arising from increasing food demand and decreasing agricultural land and depleting water resources. According to a statement in March 2011 by the Brazilian Agriculture minister Wagner Rossi, Brazil has 120 million hectares of degraded land that could be converted to agriculture, which would triple the total area under cultivation.

In 2010, Reliance, the top Indian company accounted for about 38% of the Indo- Brazil trade. They exported 1.7 billion dollars of diesel and imported 1.25 billon dollars of petroleum crude. While India imports about 70 percent of its crude oil requirements, Brazil has become a net exporter. With the recently discovered pre-salt reserves, Brazil is expected to produce 6 million barrels per day by 2020. Given the need to fuel the projected high growth rate, India would import more Brazilian crude in the future. Besides imports, Indian companies have invested in oil exploration and production in Brazil.

Hopefully India will learn from Brazil's successful experience of fuel ethanol and flexifuel vehicles to meet the rising need for fuels. Brazil is also a source of minerals and timber and manufactured products as well as regional jets made by Embraer which are needed by the fast growing Indian market.

Renuka and Reliance have positioned themselves in the middle of the complementary partnership between India and Brazil in food and fuel. Brazil is becoming important for India's food and energy security.

What does India contribute to Brazil? There are several Indian IT and BPO companies which operate in Brazil employing 3000 Brazilians. This is more than employment. The Indian companies train and prepare these young Brazilians for the new Age of Information and Knowledge society. The Brazilians working in the Indian IT and BPO companies acquire multicultural skills through their interaction with US and European clients besides Indians. Fabio from Curitiba has become the regional manager of WIPRO for the whole of Latin America. Guess who is the new country manager of WIPRO in Argentina. Another Brazilian, Valdo.

The Indian pharmaceutical companies have helped the government and people of Brazil to reduce their cost of health care. In the nineties, Jose Serra, the Brazilian health minister invited the Indian companies to enter the Brazilian market and facilitated registration of their products. Thanks to this wise initiative, there are twenty Indian pharma companies which sell their products in Brazil through local production and distribuition besides exports. The low cost generic medicines from India have put pressure on the multinationals and local companies of Brazil to lower their prices and to increase the volume of less expensive generic products. The success of the Indian companies have inspired the Brazilian pharma companies which are aggressively expanding their domestic production and also extending their presence in the rest of Latin America and Africa.

India supplies embryos to the Brazilian cattle industry. Brazil has a large stock of cattle developed as a cross between Indian and European breeds. They had to do this cross breeding since the original cattle brought from Europe could not survive the hot and tropical climate of Brazil. The Brazilians had earlier imported cattle from Ongole, Gir and Nellore in India and named the cross breed as Nelore and Indubrasil. About 90% of Brazilian cattle meat production comes from Nelore. The Brazilians have also exported this Nelore breed to Paraguay, Argentina, Venezuela, Mexico, Central America and to USA.

The Indian manufacturers who make low cost products for the price sensitive Indian masses using ¨frugal engineering¨ (a term coined by Carlos Ghosn, the Brazilian who is the CEO of Renault and Nissan) and ¨reverse innovation¨ can supply such products to the Brazilians with low income. Micromax, a low cost Indian cellphone maker has just started marketing its products in north eastern Brazil. Tata has announced plans to assemble their Nano cars in Brazil.

The trade between India and Brazil have more than tripled in the last five years from 2.3 billion dollars in 2005 to 7.7 billion in 2010. This is set to increase significantly given the complementarity in food and energy security and the change in the mindset of Indian and Brazilian businessmen who have started taking each other’s markets more seriously.

Around 40 Indian companies have invested in Brazil in IT, BPO, pharmaceuticals, agribusiness, agrochemicals, oil, mining and manufacturing. On the other hand, eight Brazilian companies have invested in India in sectors such as assembly of buses, steel, electrical motors and shoes.

The 2014 World Cup, the 2016 Olympics, the 224 billion dollar investment plan of Petrobras in this decade and the 270 bn $ investment planned in the mining sector in the next 20 years in Brazil offer unprecedented opportunities for exports and contracts for Indian companies. The Brazilian companies too can take advantage of the huge investment opportunities and the growing size of the large consumer market of India.

The Indians admire and cheer the Brazilian football team during world cups. With more exchanges with Brazilian clubs, training and getting more Brazilians to play in Indian teams, there is hope and scope for Indian football which is becoming more popular.

The air-connectivity problem between the two countries has been partly solved with the flights of Qatar Airways and Emirates Airlines who link Sao Paulo with Indian cities through Doha and Dubai. Besides providing better service, these airlines have spared the Indians the need for transit visas at European airports.

The academic world too is catching up and has started focussing on the evolving partnership between the two countries. India has established a chair in Getulio Vargas Foundation, Sao Paulo and there is a Brazilian professor in Jawaharlal Nehru University. The centre for Latin American Studies at the University of Goa is organising a major conference on Brazil on 28-30 October 2011.

The governments of India and Brazil have a number of programmes of bilateral cooperation. Faced with similiar developmental challenges such as poverty alleviation and improvement in education and health care, the two governments could learn from the best practices of each other. A number of Indian delegations have visited Curitiba city which is a role model for urban bus transportation service. On the other hand Brazilian delegations visit Bangalore to get inspiration from the Indian IT companies.

India and Brazil are part of the trilateral alliance of IBSA alongwith South Africa. They are members of BRICS, G-20 and take common stand in a number of multilateral fora. The two countries work together to realize their aspiration to become permanent members of the UN security council.

Some might say that India's trade with Brazil was just 13% of China's trade with Brazil which reached 56.6 billion dollars in 2010. Chinese companies have invested much more than Indian firms in Brazil. But India is different. It is more than a commercial partner. India and Brazil share common values of democracy, freedom and culture.

At the level of people, there is cultural complementarity between the two countries. The Brazilians admire the culture and spirituality of India. There are thousands of Brazilian followers of Sai Baba and other such Indian Gurus. Yoga and meditation are no longer passing fads. They have become part of everyday life for several million Brazilians. While Sri Sri Ravi Shankar's Art of Living is popular in Brazil, the Indians admire the way the Brazilians have made enjoyment of life as an art. The new generation of Indians are attracted to the Brazilian spirit of samba and carnival.

¨Camino das Indias¨, the Globo TV soap opera based on an Indian theme topped the viewer ratings in 2009 and has stimulated the interest of the Brazilian masses in India. This Indian story with Brazilian actors had a profound impact. Indians are greeted with Namaste and are asked if they are Brahmins or Dalits. Ganesh idols for good luck adorn the offices and homes of many Brazilians. Exports of Indian ethnic dress and handicrafts have skyrocketed. The number of Brazilian tourists to India have gone up.

There are a number of Brazilians who perform Indian classical music and dances. One of them, called as Juliana has even come to teach in Buenos Aires. Her interest in Indian dance was inspired by Father Joachim Andrade, a catholic priest in Curitiba. Father Andrade himself had learnt classical dances in India. In Brazil, he did his masters in Anthropology on the topic “Dance as a ritual: a case study of Indian Dance”. For his doctorate, he chose the topic of “Bharatnatyam as the medium of diffusion of Hinduism in Brazil ¨.

Brazilians are embracing the principles of Non-Violence of Mahatama Gandhi as a preventive remedy for the young minds which are being infected by the serious crime and violence in their cities. Palas Atena, a NGO from Sao Paulo is celebrating the birth anniversary of Gandhi every year for the last 30 years and spreading Gandhi’s teachings on non-violence among children and youth in particular.

Romance is in the air between Bollywood and Brazil. The Indian film Dhoom II was shot in Rio de Janeiro. Some Indian Reality TV shows were also filmed there. There is a Brazilian model Giselle Monteiro who has taken new avatar as a Bollywood actress. She acted in two films ¨Love Aaj Kal¨ and ¨Always Kabhi kabhie¨. She has featured on the covers of Indian women's and fashion magazines and is the Brand Ambassador for some Indian products including jewellery. Her success has inspired a number of Brazilian girls and boys who are queuing up at the Indian consulate in Sao Paulo for visa to go to Mumbai for modelling and to have a shot at Bollywood. One of the reasons for the acceptability and success of the Brazilians in Bollywood is their café con leite (coffee with milk) complexion in which they look like Indians with the same blend of coffee and milk colour in their skin. Many Indians who saw Giselle in the Bollywood films mistook her as a Punjabi. Does'nt she look like one?

Giselle is romancing a Punjabi in the Bollywood film in the picture below

Brazilians have taken to Indian fashion too. Indian ethnic dress, jewellery and accessories are popular in Brazil. Girls from Ipanema are putting bindis in their foreheads matching with their bikinis. This Bikini-Bindi combination is the symbol of the synergy between the sensual Brazil and the spiritual India. This is more than synergy. Bindi is an auspicious sign of marriage.