Latin America is the leading destination for India’s vehicle exports at 3.76 bn. Mexico is the largest market for India’s vehicle exports with 2.02 bn. Colombia is one of the top three global markets for Indian motorcycles and used to be the primary market a few years back. Hero, an Indian motorcycle firm has invested $80 mn in a production unit in Calli, Colombia.
India has also become more important to Latin America’s exports. India is the third-largest destination of Latin American exports with $22 bn in 2017. Latin America exports more to India than to its traditional partners such as Germany, France, UK, Spain, Italy, Japan and South Korea. India is the top market for Latin America’s export of vegetable oil, second largest for petroleum crude and the fourth largest for copper and gold.
India and Latin America have realised that there is mutual value addition, going beyond the foreign exchange earned in exports.
India exports billion-dollar worth generic medicines to Latin America. This has helped Latin American consumers and governments to reduce the cost of health care, which has become affordable to millions of people. The entry of Indian generic pharmaceuticals in Latin America in the last two decades had put pressure on local and multinational firms to reduce their prices and increase the proportion of generics as against the costly patented medicines.
About 30 per cent of India’s exports to Latin America is industrial raw materials such as APIs (Active Pharma Ingredients – pharma, raw materials), organic chemicals, raw cotton, yarn, fibre and dyestuff. These have helped Latin American manufacturing sector to reduce their cost of production and stay competitive. Most Latin American pharmaceutical manufacturers import APIs from India.
India sources about 15 per cent of its global crude oil imports from Latin America. This helps India to reduce over-dependence on the volatile Middle East and diversify import sources. Oil is a top global export of Latin America which has large reserves as well as the capacity to increase its exports. The US, the principal market of Latin America has started reducing its oil imports after the game-changing shale revolution. On the other hand, India needs more and more oil to fuel its high economic growth. India’s domestic crude production has levelled and imports have inevitably been increasing. There is thus a clear complementarity between India’s demand and Latin America’s supply.
India has been importing $2 bn worth soy oil and sunflower oil from South America. This helps India to reduce the overdependence on Indonesia and Malaysia, the monopoly suppliers who account for about 12 mn tons out of India’s total imports of 15 mn. The health-conscious Indians appreciate the South American soy and sunflower oil as better than the South East Asian palm oil which has more fat.
In recent times, South America has started supplying pulses to India which imports about five mn tons a year from countries such as Myanmar, Canada and Australia.
India is set on the course of increasing imports of vegetable oil and pulses in the long term due to the growing gap between domestic production and demand. India is losing every year hundreds of thousands of hectares of agricultural land to urbanisation and industrialisation.
India faces serious water shortage and the water table in the main agricultural provinces including Punjab are going down due to indiscriminate and unsustainable pumping of groundwater for irrigation of water-intensive crops such as rice and sugarcane. At the same time, the Indian population increases every year by about 15 mn, equal to the population of Chile. The growing middle class wants to eat better food, going beyond the staple of basic cereals. On the other hand, South America has vast tracts of arable land and can bring in millions of hectares under cultivation. The region has abundant water reserves as well as technology and best practices. It has the potential to increase production to feed another 500 million more people. This surplus agricultural capacity is useful to India’s food security in the long term.
Indian firms have invested over $10 bn in Latin America in sectors such as energy, pharmaceuticals, chemicals, auto-parts and IT. The Indian IT, BPO and KPO firms employ around 30,000 young Latin Americans, who appreciate the opportunity to learn and upgrade their skills. Some of these have become entrepreneurs after gaining experience with the Indian tech firms.
Latin American firms have invested about a billion dollars in India in areas such as soft drinks, multiplexes, theme parks and auto-parts. Latin American software firms such as Globant from Argentina, Stefanini from Brazil and Softek from Mexico have established development and delivery centres in India employing over a thousand Indian software engineers.
With culture tools — language, food, and art, among them—people from India and Latin America can strengthen their understanding of each other. Cultural exchanges between the two regions have increased over the years, with several educational institutions offering scholarships, for example, in dance and music. Moreover, Latin American embassies in India organise music festivals and other cultural programmes in various parts of the country; these events have managed to attract sizeable Indian audiences.
Latin America has even added value to Indian spiritual business. Several thousand Latin Americans practice and teach yoga, meditation and disseminate the teachings of Indian Gurus. The Argentine band Yoga Rave sings in pure Sanskrit in their shows performed sometimes in night clubs. Hastinapura, City of Wisdom (ciudad de la sabiduria) in Argentina has temples of Ganesha, Krishna, Surya, Narayana, Siva and Pandavas. Argentines learn philosophy, read in the library, practise yoga, meditation and sing Bhajans.
In 2017-18, the Indo-Latin American trade was $34 bn. India had exported 12 bn and imported 22 bn. The trade has the potential to reach $100 bn by 2025. India and Latin America see the future not only through these numbers but as long-term win-win partners with mutual value addition and complementarities.
The new paradigm of Indo- Latin America economic relations have added a real Bollywood touch too. Gustavo Santaolalla of Argentina has composed music for Aamir Khan’s film ‘Dhobi Ghat’. Barbara Mori, a Mexican, acted as the heroine in the Indian film ‘Kites’. Peruvian actress Vallery Maraví is making a career in Indian cinema. Soon, she will star in a series for the country.
(DIDHITI GHOSH is the Director of a cultural-exchange radio programme at Radio Satelitevisión y Americavisión, Chile. She is a professor & a certified conference interpreter of the Spanish language and is the Bureau Chief of INDIAN OBSERVER POST based in Kolkata. Contact: didhiti.24@gmail.com).