India has become more important as an export destination for Latin America than their their traditional European trade partners such as Germany, UK or France. In 2016 Latin America exported 16.7 billion dollars of goods to India while their exports to Germany was 14.4 billion, Spain-13.5bn, UK-10 bn, Italy-9.3 bn and France – 7.2 bn.
India was the sixth largest export destination for Latin America in 2016, after US, China, Netherlands, Canada and Japan. In 2014, India was in the third rank with 29 billion dollars ahead of Japan, Netherlands and Canada. The main reason for the drop in Latin American export to India in 2016 is the sharp fall in prices of oil, the main Indian import from the region.
India is the number one destination of Latin America's vegetable oil exports, the second largest importer of Latin American crude oil, third for the region's exports of copper, fourth for gold and also fourth for ores.
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 going to continue its ranking in the years to come. India has already overtaken China in GDP growth rate and is set to surpass China in population too.
Petroleum crude, copper, gold, ores and vegetable oil are among the top global exports of the region and at the same time these are the major imports of India from the world. India is going 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 is complemented by Latin America's potential to export more with its ample resources.
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. Besides soy and sunflower oil, the region can supply palm oil to India. Some countries in the region have started palm plantations and exports of oil. This will help India to reduce the over dependence on the monopoly suppliers Malaysia and Indonesia and bring down prices. South America has started exporting small quantities of pulses to India which is the largest importer in the world.
Apart from petroleum crude, vegetable oil, minerals, sugar and gold, Latin America exported to India in 2016 manufactured products such as equipments and machinery ( 432 million), iron and steel (227m), chemicals ( 200 m) electrical equipments ( 173 m) and plastic products ( 172 m). 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 as well the huge Indian "retail revolution” which opens possibilities for supply of value added food and consumer products from Latin America.
Latin American governments and business need to proactively explore the large long term opportunities offered by India with more business delegations, participation in Indian trade fairs, market studies and strengthening of commercial sections of the embassies.
More detailed report in my previous blog…
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Source of statistics: ITC Geneva
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