Indian and Latin American cooperation

Claudia Fonseca Sosa

THIS year, India has shown a notable interest in increasing its economic relations with Latin American countries. Given the serious crisis in the Eurozone and the deceleration of the U.S. economy, nations south of the Rio Bravo are demonstrating greater macroeconomic stability and represent a major growing market.

For example, Brazil, the principal regional buyer of Indian products and the second-largest supplier to the country, increased imports from the Asian giant by 66.2% on the first seven months of 2012. Mexico, the second largest buyer and fourth Latin American exporter to India, raised its exports to the country by 72.1% in the first half of the year.

Other Latin American nations, essentially exporters of raw materials, also have a secure market in India at a time of financial instability. Indian business executives predict that, by 2014, bi-regional trade will be double that of 2011.

However, the Indian Ministry of Foreign Affairs believes that economic links with Latin America could be more developed, and thus exceed the current trade volume of $25 billion, an insufficient figure and equal to 10% of Chinese economic exchange with the region.

The Indian economy is historically based on manufactured goods and agriculture, being one of the principal world producers of sugar cane, cotton and jute. But in recent decades the country has diversified and developed into sectors such as space and aeronautics research, informatics, telecommunications, electronics, medicine, oil and natural gas.

In fact, India’s dynamic industrial development has caught the attention of companies worldwide, leading to the establishment of subsidiaries in the country, which possess a large qualified workforce.

As a member of the group of emerging economies, BRICS, together with Brazil, Russia, China and South Africa, India contributes half of global economic growth. In 2011, its Gross Domestic Product grew by over 8%.

In June 2012, a ministerial representation from the Community of Latin American and Caribbean Community (CELAC) had a meeting in New Delhi with Indian government officials, during which both sides expressed a mutual interest in extending political relations and economic ones in particular. It was the first time that CELAC, comprising 33 countries in the region, had negotiated abroad as a bloc.

Present at the meeting were the foreign ministers of Chile, Alfredo Moreno; Venezuela, Nicolas Maduro; and Cuban Deputy Foreign Minister Rogelio Sierra, the CELAC troika, while the Indian delegation was headed by the then Foreign Minister S. M. Krishna.

The meeting in the Indian capital ended with the signing of a joint statement, announcing the decision to create an India-CELAC Business Council and a Science Forum for joint research in the fields of medicine, agronomy, astronomy, information technology and renewable energy.

They participants realized that energy security is key to economic development and thus agreed to promote the participation of business executives in fairs, forums and trade missions.

It was also agreed to strengthen multilateral cooperation between India and CELAC, through making coordinated responses to regional issues and addressing international challenges such as the financial crisis, climate change and terrorism.