Unemployment in Latin America is decreasing...

The unemployment rate in Latin America and the Caribbean(LAC)  in 2012 was the lowest in recent decades, reaching 6.4 percent, according to a joint report (released on 21 May 2013) by the Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labour Organization (ILO). The unemployment rate has fallen from 6.7% in 2011.  It is expected to fall by another 0.2 percent in 2013. 

This is impressive given the massive unemployment situation of Spain and some other European countries. In a role reversal, the Spanish and Portuguese  are emigrating to Latin America these days in contrast to the past when Latin Americans were going for jobs in Europe. In the last Latin America-EU summit meeting President Rafael Correa of Ecuador said," The Europeans are welcome to come to Latin America for jobs".

The unemployment rate for the LAC region was 11.2 percent in 2012 and has been declining steadily.  In the case of Brasil, the rate has decreased from 11.7% in 2002 to 5.5% in 2012; Argentina from 19.7 to 7.2 %; Colombia from 17.6 to 11.2%; Chile from 9.8 to 6.4%; Peru from 9.4 to 6.8%; Venezuela from 15.9 to 8.1%. In the case of Mexico, while the rate has fallen from 6.6 in 2010 to 5.9% in 2012, there has been an increase from 2.7% in 2002.

The declining trend of unemployment is part of the new virtuous cycle of the region in which economic growth is driven by domestic demand created by the income of the people who enter the job market. This trend has started since 2003 with GDP growth, lowering of inflation, revival of manufacturing, boom in global commodity demand and prices, flourishing services sector and strengthening macroeconomic fundamentals of the region. The wages, including minimum wages, are correspondingly increasing in the region.

Peru - the new Billion Dollar trade partner of India in Latin America

India's trade with Peru crossed the one billion dollar mark in 2012 reaching 1.128 billion dollars. With this, Peru has joined the Billion-Dollar club of the other six countries namely Brasil, Venezuela, Mexico, Chile, Colombia and Argentina with whom India's trade is over one billion dollars.

The increase in trade with Peru was an impressive fifty percent from 750 million dollars in 2011. In 2007 the trade was 470 million dollars and it has been increasing steadily. The bilateral trade could reach 2 billion dollars by 2015.

India's exports to Peru reached a record 742 million dollars in 2012 from 510 million in 2011 and 250 million dollars in 2007.  This is more than the exports to Argentina ( 573 million dollars in 2012), the third largest market of Latin America. 

The main exports of India in 2012 were: iron and steel products including pipes - 100  million dollars;  motorcycles and cycles- 72 million;  cotton yarn and fibre-74 m, vehicles-59 m and polyester yarn- 41 m.

India's imports from Peru in 2012 were mostly minerals and metals. The major items were: copper-140 million dollars; gold-107 million; other minerals- 120 m. Peru has started exporting fresh fruits such as grapes. Fishmeal is another regular import from Peru. 

Peru has transformed itself politically and economically in the recent past. Democratic instituitions have taken strong roots. The current President Ollanta Humala pursues a pragmatic and balanced policy (Lulaism) of pro-poor and pro-market- policies. He has helped millions of poor people to come out of poverty through government projects as well as through job creation by the flourishing private sector. His spending power for his Inclusive Agenda has increased thanks to the higher tax revenue generated by the dynamic corporate sector. Although he is a leftist, he has not allowed his convictions to distort the foreign policy. He maintains good relations with US and the neighbors and does not get into any ideological fights or promotion as Chavez did. Labelled as the Chavez of Peru by the opposition, Humala lost the elections in 2006. But in the 2011 elections he rebranded himself as the Lula of Peru and won easily. 

The country is enjoying a virtuous circle of economic growth. Over the period 2002–12, the Peruvian economy almost doubled in size, real GDP grew at an average annual rate of 6.3 percent (the highest 10-year average growth in Peru’s history) despite the impact of the US and European crises, and the average annual inflation rate fell to 2.7 percent, one of the lowest in the region. In 2013, the projected GDP growth rate is is six percent after a growth of 6.3% in 2012. The macroeconomic fundamental are strong and healthy.

Foreign investment is pouring into mining, hydrocarbons and big infrastructure projects. The FDI in 2012 was 12.2 billion dollars, an increase of 49% over 2011. Peru is one of the seven countries in Latin America which has an Investment Grade rating. There are four big mining projects which will double Peru’s output of copper, its largest single export, in the next four years. Peru is one of the leading mining countries of the world with reserves of minerals such as copper, gold, zinc, silver, lead and tin. The Peruvian mining sector expects to see an investment of 52 billion dollars in the next ten years. There are oil and gas potentials too which are being explored. Peru has already started exporting gas.

The Peruvian government has an innovative corporate taxation policy. It gives companies the option of paying part of their tax bill in the form of regional infrastructure works in the poorest regions. The companies can choose from approved lists of public works projects in various regions, or make their own proposals. The companies love this new mechanism which enhances their Corporate Social Responsibility image more than what they would gain by simple payment of taxes. The people also like it since the projects are done more efficiently and cost-effectively. 
There are investment opportunities in Peru for Indian companies in mining, energy and services sectors.The foreign investment policies of the Peruvian government are positive, transparent, predictable and stable. Four Indian companies have invested in mining with modest amounts. This includes IFFCO which has invested in a potash mine in Peru in collaboration with a Canadian company. TCS and Aegis have opened IT/BPO centres in Lima. Some Indian pharma companies have offices in Lima. There is a vibrant Indian community and some of them are in business. An Indian owns a chain of cinema halls while another has set up pharma manufacturing and distribution units. A Peruvian soft drinks company has opened a bottling plant in Maharashtra to produce and market its BIG Cola brand of fizzy drinks. Their audacious act of competing with Coke and Pepsi in India ( although the competition is not significant) is admirable since even Indian cola producers have given up.

India's exports to Peru should cross a billion dollars in 2014, given the high rate of growth in recent years. But India's exports are at a disadvantage vis-a-vis the exports from Peru's FTA partners. Peru has signed FTAs with a number of countries including China, US, Japan, Thailand, Singapore and is a member of regional economic groupings such as Pacific Alliance, APEC and Andean Community.   It is in India's interest to initiate negotiations to sign a FTA/PTA with Peru as India has done with Mercosur and Chile. 

FDI into Latin America increases to a new record of 166 billion dollars in 2012

Foreign Direct Investment (FDI) flow into Latin America hit a new record high of US$ 166 billion in 2012, according to a report published by the Economic Commission for Latin America and Caribbean (ECLAC) on 14 May. This is 4.4 % above the level posted in 2011 and confirms a consistent uptrend that began in 2010. The figures for 2012 were particularly significant because the global FDI flows had decreased by 13 percent in 2012 from the previous year. The developed countries had seen a drop of 22% in FDI in 2012. 

The region’s share of global FDI flows reached 12.5 % in 2012. Brazil was the largest recepient of FDI with 65 bn $ ( 2% less than in 2011) accounting for 41% of the total FDI flows into the region. Chile was the second highest recipient with 30.3 bn $. Colombia was third with 15.8 billion, followed by Mexico 12.6 billion ( this was 35% less than in 2011), Argentina-12.5 bn and Peru 12.2 bn ( 49% increase over 2011). Central America received 8.8 bn  of which Panama was the highest recepient with 3 bn followed by Costa Rica- 2.2 billion. 

Much of the FDI in South America went into natural resources sector including oil and gas and minerals. In Brasil and Mexico a significant portion of FDI went into manufacturing and services. Bulk of of FDI in Costa Rica went into forty high-technology greenfield projects in advanced manufacturing and life sciences.

The confidence of the foreign investors in Latin America has gone beyond FDI and they increased their portfolio investment also in 2012.

The general macroeconomic stability of the region and sustained growth (despite the ongoing crisis in Europe) as well as the relatively high prices of commodities have been the main drivers of FDI into Latin America.

US and Europe are the main origin of FDI although a substantial part ( including Chinese investment) has come through tax havens such as Caymen Islands, British Virgin Islands and Luxemburgh.

Outward FDI by Latin American companies ( mostly MultiLatinas) increased by 17% in 2012 to an all-time high of US$ 48.7 billion, following historically high figures for the past three years. The share of MultiLatinas in the total FDI into Latin America is an impressive 14 percent.These investments have come mainly from companies of Brazil, Chile, Colombia and Mexico, but in 2012 came almost exclusively from Mexico and Chile. Mexico was the region’s largest outward investor in 2012, with US$ 25.6 billion, more than double the figure for 2011 and far exceeding the previous high of two years earlier. América Móvil was the prime stakeholder in this process, as it expanded its activities into Europe. Chilean outward investment also reached a fresh record in 2012 at US$ 21 billion, mainly in South America and principally in the retail industry, forestry and transport. The most notable case is the merger of Chilean airline LAN with Brazil’s TAM, which had been announced in 2010 but was not completed until 2012. The US$ 6.5 billion transaction via a stock swap has created LATAM, a binational airline that is now the largest in Latin America. Many Brazilian firms have continued to expand abroad, as well, and account for 7 of the 20 largest acquisitions by MultiLatinas in 2012. For Indians it would be interesting to know that the Mexican company Cinépolis (the fourth largest movie theatre chain in the world) announced early this year the opening of 350 theatres in Brazil, Colombia, India and the US.

There was no big ticket investment by Indian companies in Latin America in 2012. But there were some cases of investment in double digit millions. There is potential for Indian companies to invest in Latin America in sectors such as energy, agribusiness, mining and IT/BPO. 

visit of business delegation from Argentina to India 9-13 May 2013

This is one of the largest delegations from Argentina with 34 companies and 21 officials, Mayors and Ministers lead by the Governor of San Luis province of Argentina

Interests of the business delegation include food industry, minerals, pharmaceuticals, chemicals, agro machinery, energy, green technologies, biotechnology and IT

The delegation has meetings in Chennai on 9 May, in Noida -11 May, in Agra-12 may and New Delhi 13 May.

San Luis is the most advanced province in Argentina and one of the best in the whole of Latin America in terms of economic development, education, IT, infrastructure, business- friendly policies and progressive and visionary outlook. Of course, it is a small province in terms of size and population.

Programme

Thursday 9 May

meeting organised by the Madras Chamber of Commerce at the office of Surana and Surana
contact

K.Saraswathi

Secretary General

MCCI

Tel: 044-24349452/24349871

Fax: 044-24349164

Direct : 044-24321734

Mobile : 9600155571

E mail:   madraschamber@madraschamber.in

saraswathi.k@madraschamber.in

www.madraschamber.in

1) Saturday May 11th:  Seminar Argentina-India Alliance, 

              Organizer: Indian Industries Association, Casa de la Amistad Argentina-India and Government of San Luis

0. Venue: Hotel Radisson, Sector 18, Noida 
   
   Time: 10 AM
   • 11:00hs a 13:30hs. B2B meetings Asociación de Industrias de la India (AII). Organiza Gobierno de San Luis, AII y la Casa de la Amistad Argentina. India.
• 13:30hs Lunch

Contact person: Mr. Mansoor Lari, mnlari2011@gmail.com, 9999387486, 9936189458






2) Sunday May 12th, Meeting Lunch with Indian Industries Association,  Agra.


Organizer: Indian Industries Association, Casa de la Amistad Argentina-India and Government of San Luis


Venue:  Hotel Marina, Agra. 


Lunch: 12:30 noon a 2:30 PM 


B2B meetings: 2.45 PM to 5.15 PM 14:45hs a 17:15hs. 


Maybe CM Akhilesh Yadav be present (to be confirmed)


Contact person: Contact person: Mr. Mansoor Lari, mnlari2011@gmail.com, 9999387486, 9936189458




3)Interactive Meeting & B2B with Hon’ble Mr Claudio Poggi, Governor (Similar to Chief Minister), San Luis & Accompanying delegation
Monday , May 13, 2013-
Federation House, 1 Tansen Marg, New Delhi

Some facts and figures to sharpen the focus of Indian exporters to Latin America

Which country is the largest importer in Latin America? Not Brasil, even though it is the largest market of the region. Mexico's imports in 2012 were 371 billion dollars as against Brasilian imports of 223 billion. India's exports to Mexico were 2950 million dollars which is just 0.8% of the total Mexican imports. Indians need to focus more on Mexico, which has a more open market with liberal import policies while Brazil is relatively more protective. India's exports to Brasil in 2012 were 5042 million dollars. But forty one percent ( 2.1 billion) of the exports were diesel oil. The Brasilian imports of this will come down and stop with the ramping up of Brasilian refining capacity soon. In the case of Mexico, the exports of India are well diversified with engineering products, chemicals, pharmaceuticals and textiles.

The third largest importer in Latin America is not Argentina, which is the third largest economy of the region. Chile has emerged as the third largest importer in 2012 with 75 billion dollars, overtaking Argentina's imports of 69 billion dollars. In 2012, India's exports to Chile were 658 million dollars which is 0.87% of Chile's total imports. Chilean population is just 17 million while Argentina has 40 million people. The Argentines keep imposing new and arbitrary import and foreign exchange restrictions taking the country to the old and outmoded license raj system. But the Chileans have the most open economy with a single uniform tariff of just six percent on imports.

Many Indian exporters think that the central american markets are too small for their attention. They need to know that the total imports of the eight countries which form the central american integration group SICA were 94 billion dollars in 2012. Panama is number one importer with 24 billion dollars followed by Costa Rica- 18 bn, Guatemala-17 bn and Dominican Republic- 15 billion. If the Indians target one percent of the total imports of Central America, the exports would amount to almost a billion dollars ! 

India should target 20 billion dollars of exports to Latin America by 2017 from the 12 billion dollars in 2012. This is a realistic target in the light of the new paradigm of the market of Latin America which continues to grow with solid macroeconomic fundamentals, as seen from the latest ( 23 April 2013) report of  the Economic Commission for Latin America and Caribbean ( ECLAC). Some highlights of the report:

-Latin America's total trade had increased to 2151 billion dollars in 2012 from 2092 bn in 2011. The regions' exports increased to 1090 bn $ from 1074 bn while imports increased to 1061 billion dollars in 2012 from 1018 bn in 2011. 

- The GDP of the region is projected to grow by 3.5% in 2013. 

-Paraguay will be the topper of the Latin American chart of GDP growth in 2013 with 10%. Paraguay was the topper in 2010 too with 13.1%. 

-Panama will have the second highest growth of 8%. It had the highest growth (over 10% ) in 2012 and 2011 as well as in 2008. 

-Peru will have the third highest growth of 6%. Peru has emerged as a consistent high growth country in recent years. Its annual average growth from 2003 to 2008 was an impressive 6.9%

-Brasil is expected to grow by 3% and Mexico by 3.5%, Argentina by 3.5%, Colombia-4,5%, Chile-5%, Venezuela-2%. Central America is projected to grow by 4.3%.

-In 2012 the actual growth of the region was 3%. Domestic demand continued to be the main driver of growth, sustained by solid labour market indicators and credit expansion.

-Average inflation rate for the region in 2012 declined to 5.6% from 6.8% in 2011.Venezuela which had the highest inflation of 29% in 2011 had brought it down to 19.5% in 2012. 

-The favourable labour trends that marked much of the last decade in the region continues. Urban open unemployment rate went down again, from 6.7% in 2011 to 6.4% in 2012, the lowest in the last twenty years. Brasil has the lowest unemployment rate of 5,5% in its recent history.

Colombia has become a billion- dollar destination for India's exports

Yes. India's exports to Colombia has crossed the billion dollar mark, reaching 1.124 billion dollars in 2012. Colombia is the third biggest destination of India's exports to Latin America after Brasil and Mexico.

The rate of increase of India's exports to Colombia has been impressive in recent years. The exports have more than doubled in the last three years from 504 million dollars in 2009, 686 m in 2010 and  976 million dollars in 2011.

Major export items in 2012 were: motor cycles - 285 million dollars, vehicles-126 million, cotton yarn and fabrics-130 m, organic chemicals-78 m and pharmaceuticals-59 m.  Bajaj, TVS, Tata and Hero and even Reva electric cars have established their brands in the country.

In addition to exports, Indian IT/BPO companies such as TCS, Infosys, Genpact and Sutherland have operations in Colombia. A group of four young Indians have set up a successful and growing IT company in Bogota called as Sophos Solutions which provides banking solutions. Three of the founders of this company are married to Colombians. They are proof for my theory that " the risk of doing business with Latin America is...falling in love "

ONGC Videsh Ltd ( OVL) has invested a billion dollars in oil. If you thought India is a poor competitor and cousin of China in foreign investments, here is a surprise. OVL's investment in the Colombian oil field is a 50:50 joint venture with the Chinese company Sinopec. More surprise.. the original owner of the oil field from whom OVL and Sinopec bought was an Indian based in US. Reliance also has some off-shore concessions in Colombia.

United Phosporous Ltd ( UPL) has acquired a local company manufacturing agrochemicals. Praj from Pune has implemented contracts worth 30 million dollars for setting up ethanol plants.

Some Indian companies including Renuka Energy are exploring opportunities for investment in mining.  Colombia is one of the largest exporters of coal in the world. India has started importing coal from Colombia.

India's imports from Colombia in 2012 were 1363 million dollars in 2012. Of these, 1283 m ( 94%) were crude oil. Emeralds, of course, is an important item of import.

The Colombian economy is in an unstoppable growth trajectory. The GDP growth was 4.5% in 2012 and the prospects are better for 2013. The macroeconomic fundamentals are strong and healthy.

Colombia has come out (almost) of its domestic curses of guerrilla warfare, drug trafficking and bad image of crimes including kidnapping. The guerrillas are on the run. The government has an upper hand and is taking more and more control of the guerilla occupied territories in an irreversible manner. This means more land is now available for exploration of oil and minerals as well as agricultural and industrial expansion. Medellin, which was notorious as the den of drug lords, is now a peaceful and thriving industrial and business centre. The government of President Manuel Santos is business-friendly, predictable, open and transparent in trade policies and is proactive in welcoming foreign investment.

Colombia is now threatening to overthrow Argentina as the third largest economy of Latin America. I can say with confidence that the Colombian political and business leaders have what it takes to achieve their goal.

Steady rise of India's trade with Mexico

Yes.. Steady is the word to describe the growth of India's trade with Mexico, the second largest market of Latin America. The bilateral trade reached 6.29 billion dollars in 2012 from 4.15 billion in 2011,  2.9 bn in 2008 and 1.03 bn in 2003.

India's exports were 2.95 billion dollars in 2012 increasing by 24% from 2.38 bn in 2011. Engineering products topped the list of export items of India as usual. Exports of vehicles and parts were 466 million dollars followed by diesel- 439 m, organic chemicals-306 m , electrical and sound equipments-290 m, equipments and machinery-211 m and garments -150 m.

Crude oil imports in 2012 were 2.83 billion dollars (accounting for 88% of India's imports from Mexico) followed by electrical machinery and equipments - 242 m. India was the eighth largest export destination of Mexico in 2012. Reliance was the importer of Mexican crude oil, as in the past several years.

Although Brazil is the largest market of Latin America, Mexico is the trade leader in the region. Mexico's trade in 2012 was 741 billion dollars while Brasil's trade was 408 billion. Eighty percent of Mexico's exports go to USA and Canada, with which Mexico is bound in NAFTA.  Surprisingly USA accounted for only 49% of Mexico's imports. Mexico had a trade surplus of 89 billion dollars with USA in 2012.

Mexico had a massive trade imbalance with China in 2012 as usual. Mexican exports to China in 2012 were just 5.7 billion dollars while their imports were 57 billion.

Mexico's macroeconomic fundamentals are strong with healthy indicators such as 3.57% of inflation, interest rate of 4.5%, current account surplus and ample forex reserves. GDP growth in 2012 was 3.8% and it is expected to go up in 2013.The manufacturing sector is growing with a new vibrancy after having overcome the Chinese competition. Many American and  foreign companies have started production of manufactured goods in Mexico for the markets of USA and Canada. Mexico has become the fourth largest exporter of cars in the world after Germany, Japan and South Korea.

The assumption of Enrique Pena Nieto, the young, dynamic and visionary leader as the new President of Mexico augurs well for accelerated economic growth and prosperity. He has already implemented some reforms, which were considered as politically impossible even last year. He has shown courage and diplomacy to work with the opposition parties to bring about the reforms needed by the country.

Given the positive prospects of Mexico in the coming years, India's trade with Mexico could reach 10 billion dollars by 2015. 

India's Trade with Argentina increased marginally in 2012

The marginal increase is not at all bad given the fact that Argentina's global trade had decreased to 151.3 billion dollars in 2012 from 161.6 billion in 2011. Their imports reduced to 60.5 billion in 2012 from 64.6 bn in 2011. Their exports declined to 90.8 bn in 2012 from 97 bn in 2011.

The reduction in imports is mainly due to the stringent Argentine government restrictions on imports and foreign exchange. Importers are generally required to export an equivalent amount of what they import.The Import license and foreign exchange for imports are complicated/ delayed/denied arbitrarily by the authorities in a non-transparent manner. The government has taken recourse to these measures because of inadequate foreign exchange reserves to pay for imports and service the debts. The government is also doing this as part of their ideology to control the economy and business more and more.
This policy is likely to continue in 2013-14 ( till the next Presidential elections) too with minor variations.

Argentina's exports were down in 2012 due to the slow down of the economies of Brasil, China, and Europe. Exports to China had decreased by23% in 2012 from 2011.

India's trade with Argentina increased by 2.2% to 1837 million dollars in 2012 from 1774 million in 2011.
India's exports in 2012 were 573 million dollars as against 561 m in 2011. India's imports in 2012 were 1264 m while they were 1213 m in 2011.
India ranked 18th in both exports and imports in 2012 among the global trade partners of Argentina.

India's major exports in 2012 were: organic chemicals- 154 million dollars ( 27% of total exports), sound and image devices - 91 million dollars ( 16%), vehicles and parts-64 million, yarn and fabrics-45 m, garments-21 m, dyestuff- 17 m..
India's main imports in 2012 were: edible oil ( mostly soy oil)- 1111 million dollars ( 88%), minerals- 30 m, leather- 29 m, cotton- 10 m
Argentina is the main source of soy oil imports of India. The annual imports are around one billion dollars in recent years except in 2010 when it went up to 2 billion. The soy oil imports from Argentina fluctuates depending upon the international palm oil prices. However, given the ever-growing deficit of India  in edible oil production, India's imports of soy oil from Argentina will increase in the long term.

Argentina, which is the third largest market of Latin America after Brasil and Mexico, used to be the third largest destination for India's exports in the past. Not any longer.. It has slipped to the sixth position in 2012.  Colombia has replaced Argentina in the third rank while Peru and Chile have assumed fourth and fifth rankings.

Despite the current Argentine restrictions on imports, there is lot of scope to increase India's exports in the long term. Most of the macroeconomic fundamentals of the Argentine market are relatively strong and the economy is set on a course of sustainable growth.  The Indian exporters need to keep this positive long term perspective and work harder....

India's trade with Brasil crosses the 10 billion dollar mark

India's trade with Brasil reached 10.6 billion dollars in 2012 ( January to December), increasing by 15% from 9.2 bn $ in 2011. Twenty years back, in 1992 the bilateral trade was just 177 million dollars. Ten years back, in 2002, it was 1.2 billion dollars.

India's exports to Brasil declined in 2012 to 5.04 billion dollars from 6 billion in 2011.  

Forty one percent of India's exports ( 2.1 billion dollars) in 2012 were diesel exported by Reliance. The fall in India's exports in 2012 is due to the 33% decline in exports of diesel. 

The second biggest export was chemicals and pharmaceuticals which amounted to 697 million dollars. The third largest export item was polyester yarn – 225 million dollars. Autoparts exports were 106 million dollars. Apart from these items, the exports are well diversified with a wide range of  engineering products and industrial raw materials besides textiles and traditional items. Surprisingly coal was an important export – 99 million dollars.

India's imports from Brasil in 2012 were 5.58 billion dollars, increasing from 3.2 billion in 2011.  Crude oil ( imported by Reliance) accounted for 61% of the imports- 3.4 billion dollars. In fact, crude oil imports had increased by 100% in 2012 from 2011.

Sugar ( imported by Renuka Sugar ) was the second largest import-500 million dollars, accounting for 9 % of total imports.

Soya oil imports were 364 million dollars and Copper imports were 294 million dollars.
Imports of Embraer aircrafts amounted to 184 million dollars in 2012.

Of the total bilateral trade of 10.6 billion dollars Reliance alone accounted for 5.5 billion dollars with their import of crude oil and export of diesel.  In fact, this kind of exchange by Reliance has been the major factor for the significant growth in India- Brasil trade in recent years.

India is expected to increase its imports of crude oil in the coming years, given the increasing capacity of Brasil to produce more oil and the ever-increasing dependence of India on imported oil. India will also steadily buy more soy oil from Brasil to bridge the growing gap between domestic demand and production of edible oil. Copper imports will also go up in tune with the economic growth of India.

Renuka has regularly started importing sugar from Brasil in recent years. They imported for the Indian market in 2008-9 when India had a deficit in sugar production. In other years renuka imports raw sugar, refine it in their facilities in India and export it as white sugar to other countries.

The Indian exports of chemicals, pharmaceuticals, engineering and other manufactured products as well as industrial raw materials will continue to increase steadily with the intensification of export promotion by the Indian exporters who are targetting Brasil as a large and growing strategic market.The only exception is diesel export which will decline in the coming years as Brasil increases its refining capacity.

Bilateral trade with India accounted for two percent of Brasil' total trade of 408 billion dollars in 2012. It is significant to note that India has moved up as the seventh largest market for Brasil's exports.

The next milestone by 2016 should be 20 billion dollars..

Mexican IT company Softtek acquires Indian software firm

This is the first time that a Latin American IT company has acquired an Indian software firm to make entry into India. So far it was the other way. The Indian companies have acquired and established operations in Latin America employing 20,000 Latin Americans.

Softtek, the Mexican IT firm has now acquired an Indian software company Systech Integrators, founded by Indian Americans and headquartered in San Jose, California with centers in India and US. Systech specializes in SAP solutions and services.

Softtek employs 8000 staff and operates in 30 countries including in India and China.

Another point of interest - Gabriel Rozman, the Executive Vice President of TCS and who established TCS in Latin America was the CEO of Softtek in 2000 before joining TCS in 2001.

Boom in mining investment in Peru

There are 52 ongoing mining projects in Peru with 53 billion dollars of investment in the coming ten years.

In 2012, the government gave 4668 mining permits to 582 companies up from 3100 in 2011.

Peru expects to increase its copper production from the current level of 1.3 million tons to 5 m tons by 2025. Peru is currently the third largest coppoer producer. Chile, the number one, produces 5.7 m tons
Mining accounts for 15% of the GDP of Peru.

The big investments include
- Chinalco ( Chinese) - 2.2 bn $ copper mine
-Newmont - 5 bn in gold and copper
-Anglo American - 3 bn
-Xtrata - 6 bn

One of the major challenges for mining is the protests from local communities displaced and affected by the mining operations. There have been more than 200 conflicts some of which turned violent resulting in the death of some protestors. Chinalco is spending 150-200 m $ for resettlement of the affected families but the community leaders demand 300 m. Other companies are also making provision for " social funding" to avoid the social tensions. Fortunately, Ollanta Humala, the leftist president of the country, is able to manage the conflict between the miners and the local communities with his leftist credentials.

Brazilian investment in new hydroelectric power

Brazil is investing in 34 new dams to be completed by 2021 to increase the generation of hydroelectricity by fifty percent.
The two biggest are:
the 7.5 billion dollar Jirau Dam.
and the Belo Monte project, to be completed by 2015 at a cost of 9 billion dollars, will produce 11,000 MW.
90% of power consumed by Brazil comes from the hydroelectric sector.
Itaipu power plant alone accounts for 25% of the Brazilian electricity generation with its 14000 MW capacity.
The biggest challenge is not finance or technology. It is the coalition of motivated western NGOs and the media who use the bogey of Amazon rain forest and environment. They carry out misleading propaganda and try to put obstacles in the way of Brazilian economic development.