Many Latin Americans
assume that India is less important for their exports than their traditional
European partners such as Germany and France. Wake up..amigos. India was the
third largest destination for Latin America's exports in 2014. The region exported
29 billion dollars of goods to India, while its exports to Japan and Spain were
21 billion dollars each, Germany-17 bn, Italy and UK-11 billion each and
France-8 bn.
In 2015, India was Latin
America's sixth important export destination with 18.8 billion dollars. This
was more than the export to Japan, Germany, Italy, UK and France. The
reason for the fall in exports to India in 2015 was the sharp drop in the price
of crude oil.
India is the number one
destination of Latin America's vegetable oil exports, with a share of 26.6% (
2.57 bn dollars) in 2015. China, the second largest importer, bought just 0.73
billion dollars from the region.
In 2014, India was
the second largest importer of Latin American crude oil exports with 20.9
billion dollars, ahead of China's 17.6 bn. In 2015, India was the third
largest, accounting for 9.65 billion dollars.
India ranks third for the
region's exports of copper and fourth for gold.
India, as a major export
market, is not a wonder of one or two years. India has emerged as a large and
growing market for Latin American goods in recent years and is set to continue
its ranking in the years to come. India has already overtaken China in GDP
growth rate and will surpass China in population too.
Petroleum crude, copper, gold
and vegetable oil are among the top global Latin American exports and
coincidentally these are the major imports of India from the world. India has
to increase its imports of these items in the future both globally and from
Latin America in view of the of the growing gap between domestic demand
and production. The increasing Indian population (15 million a year) and
consumption power of the new middle class as well as the need for fuelling the
high growth of the economy will continue to drive the rise in imports. This
Indian need to import more is complemented by Latin America's potential to
export more with its ample resources.
Crude oil
India's crude imports have
doubled in the last decade from 99 million tons in 2005-6 to 202 mt in 2015-16
( April-March, the financial year used by India). According to a 2015 report of
International Energy Agency, imports are projected to reach 358 million tons by
2040. While India's crude imports are relentlessly increasing, Latin
America is blessed with huge reserves, production capacity and surplus for
exports. At the same time, the US which is the principal market for Latin
American crude, has drastically reduced imports after the shale revolution.
Although the middle eastern suppliers are nearer, India will continue its
purchase of about 15 percent of its global imports from Latin America as part
of its strategic energy security policy to avoid over dependence on the
politically unstable gulf countries.
Agroproducts
In the case of vegetable
oil, India's imports have jumped from 0.1 million tons in 1992-93 to 8.8 mt in
2009-10 reaching 14.6 million tons in 2014-15 ( November-October used as
financial year by the Indian vegetable oil industry) and is estimated to touch
15.75 mt in 2015-16. Consumption has doubled from 10.1 million tons in 2001-2
to 20.08 mt in 2014-15 and is projected to reach 26.8 mt by 2025.
South America has started
exporting small quantities of pulses to India which is the largest importer in
the world. India's imports have reached 4.5 million tons in 2015-16 from just
0.56 mt in 1998-99 and 2.79 mt in 2007-8.
India's production of oil
seeds and pulses is unable to cope with the increasing demand due to a number
of issues, although the country is self-sufficient in cereals.
Chile, Peru and Argentina
have started supplying fruits and vegetables to India. These are not considered
as competition to domestic production but seen as complementary since they come
during India's off-season from South America which is in the southern
hemisphere.
Wines of Chile and
Argentina as well as Tequila and Corona of Mexico are popular in India and
their sales are growing.
Indian agriculture faces
daunting challenges caused by the diversion of agricultural land for other
purposes, shortage of water and low productivity due to inadequate investment
by most farmers whose land sizes are small. On the other hand, South America
has vast tracts of fertile land, abundant water, technologies and best
practices with which the region has emerged as a global agricultural
powerhouse.
Minerals
Gold is one of the major
imports of India, which is the third largest importer after Switzerland and
Hongkong/China. In 2015, India's imports were 35 billion dollars. India's
imports have had a fourfold increase from 245 tons in 1997-98 to 957 tons in
2015-16.
India has been importing
gold mostly from non-producing third countries such as Switzerland and UAE. It
is only in the last few years that India has started direct imports from Latin
American producers such as Colombia, Peru, Bolivia, Ecuador, Dominican Republic
and Brazil. The imports from the region will go up in the coming years.
India's import of copper
and other minerals are also set to rise, given the rapid industrialization,
boosted by the 'Make in India' campaign. Imports of copper concentrates have
seen an increase of twenty times from 0.08 million tons in 2000-1 to 1.8
million tons in 2015-16.
Beyond commodities..
Some critics complain that
Latin America's exports to India are mostly commodities and raw materials. But
they should be realistic and recognize the fact these are the main exports of
the region except for the manufactured goods exported my Mexico to NAFTA
partners. The number one item of exports of the region is crude oil, which
stood at 115 billion dollars in 2015. This complements the number one
item of India's import which is also crude oil. India's imports were 105
billion dollars in 2015-16.
Latin America has started
exporting finished goods to India, although the figures are not that high. In
2015-16 the exports of electrical and electronic equipments were 401 million
dollars, iron and steel items- 364 million, machinery and boilers- 196 million,
organic chemicals- 195 million and even pharmaceuticals worth 58 million
dollars. Embraer has sold planes to India and is set to increase its share in
the fast growing aviation sector of India. Brazilian Marcopolo buses, made in
joint venture with Tatas, are ubiquitous in Indian roads. 'Perto' from Brazil
has supplied ATMs to Indian banks.
The 'retail revolution' of
India has opened an unprecedented opportunity for Latin America to export
processed foods and other consumables to fill the supermarket shelves. The new
Indian middle class has developed taste for typical Latin American products
such as quinoa, stevia, tequila, Corona beer, Argentine Malbec and Chilean
wines. A Brazilian company 'Surya Brasil' imports henna ingredients from India
and exports branded Henna products to many countries including India. A
Peruvian firm 'Aje' has set up a plant in India to bottle and market its Big
Cola drinks. Cinepolis from Mexico has become the fourth largest operator of
multiplexes in India. A dozen other Latin American companies in sectors such as
steel, auto parts and electrical motors have manufacturing units in
India. There are a few Latin American software companies which provide
services to Indian clients.
Uruguayan architect Carlos
Ott has designed the largest office complex in India for TCS in Chennai.
Another Uruguayan executive rose to the level of executive vice president of
TCS for emerging markets, a reward for his success in establishing the
company's operations across Latin America. Indian language institutes need more
spanish teachers to cope with the growing popularity of Spanish which has
replaced French as the most preferred foreign language even in schools. There
is also scope for teachers of salsa dance, which has caught the fancy of the
young Indians.
Latin American firms are
yet to explore the opportunities offered by the huge investment India is making
in infrastructure including highways, airports, ports, power and renewable
energy. Some companies such as IMPSA of Argentina and Odebrecht and Andres
Gutierrez of Brazil made some tentative attempts but did not sustain them
seriously.
Entertainment and
sports business
Mexican actress Barbara
Mori and half a dozen Brazilians starlets have acted in Bollywood films. The
famous Argentine music director Gustavo Santaolalla composed music for an
Indian film Dhobi Ghat in 2010. There are a number of models from South America
active in the Indian advertisement and fashion business. A Uruguayan model
Carolina has married an Indian male model and settled in Mumbai as Carolina
Grewal.
Colombian soap operas such
as the Ugly Betty were shown in Indian TV, after adaptation. Mexican '
Kidzania' has set up edutainment theme parks in Mumbai and Delhi in
collaboration with the famous actor Shahrukh Khan. Latino music is regular fare
in Indian discos and gyms. Shakira from Colombia had successful live music shows
in India 2007. Other pop stars and bands could follow. The Latin Americans can
explore further opportunities in the Indian entertainment business which is
seeking out the exotic.
There are over twenty
Latin American football players and coaches in the clubs of India where
football's popularity is soaring. Tata Motors has contracted Messi as their
global brand ambassador. Cuban coaches have been training Indian athletes for
olympics.
India as a base for
regional and global business
The Latin American business
could use India as a base for the Asian and global markets. Techint,
a renowned Argentine steel firm has an outsourcing centre in Mumbai to service
their engineering projects in West Asia. Three Latin American IT firms
have acquired Indian software companies for their global delivery operations.
The Argentine cofounder (along with Fabrice Grinda of France) of the online
classified advertisement firm OLX launched the services not in Argentina
or France but first in India where it remains as the largest in classified
services. After its Indian success, the founders took it to other countries and
now the firm has become one of the largest global players.
'Focus India' strategy
Most of the large- volume
Latin American commodity deals are done either by multinational corporations
operating out of US, Switzerland, Singapore and Hong Kong or Indian
buying companies such as Reliance. There is therefore need for the Latin
American governments to encourage their local companies, especially the small
and medium ones, to explore the business opportunities in the Indian market.
There should be more participation in Indian trade fairs, visits of business
delegations and market studies. The Latin Americans could follow the example of
the successful entry of Chilean fruits and vegetables in India after the
commendable export promotion work done by the Chileans. If Latin Americans
do a serious and sustained 'Focus India' strategy similar to the successful
'Focus Latin America and Caribbean' programme of India in the last two decades,
there is tremendous scope to increase their share in the imports of India,
which promises to be a large long term bet for Latin America.
