NEW DELHI — Hoping to double trade with Latin America over the next five years, India says it will expand air and sea links with the region and negotiate more free-trade agreements.
From a meager $2 billion in 2000, trade between India and countries such as Brazil, Mexico and Colombia has jumped to nearly $30 billion.
The growth is huge, but trade analysts say it still far below potential.
R. Vishwanathan, who was India’s former ambassador to Argentina, Paraguay and Uruguay, says India could get much of what it needs, such as food and energy, from the resource rich Latin American region.
“For our imports, Latin America has what we need. The three largest items of our imports are crude oil, edible oil and minerals. And in India the need for these is only going to grow because of growing population,” said Vishwanathan.
At a conference in Hyderabad this week, Indian officials said trade with Latin America has been hampered by several factors, such as high tariffs and poor transport links. They said India will address these issues as it tries to double trade with the region over the next five years.
India wants to establish a direct shipping route to cut down shipment time from 45 days to 30 days with countries such as Brazil. There is also a proposal for India’s national carrier to establish a direct air link to Panama. India plans to ease visa rules with countries in the region and is negotiating free trade agreements with Mexico and Peru.
Trade analysts say improving connectivity will go a long way in boosting business ties. They point out that China’s trade with Latin America is 10 times higher than India’s, helped partly by better transport links.
"Distance plays an important role. China has good shipping links with those countries through the Panama Canal. We don’t. Our shipping sector is not so strong and the costs of transportation are very high," said Rupa Chanda, an economics professor at the Indian Institute of Management at Bangalore.
Indian companies have already gained a foothold in Latin America. In recent years they have invested $16 billion in sectors such as information technology, energy and pharmaceuticals.
Some companies in the agriculture sector are also attracted by the ample land and water resources in Latin American countries. An Indian company is now among the five top sugar producers in Brazil.
Trade analysts say at a time when growth in Europe and the United States is slowing, the growing economies of Latin American countries are emerging as a new frontier.