Politics, Business & Culture in the Americas

India-Peru: A New Pacific Pivot

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Since the late 1990s, both India and Peru have turned their focus to each others’ regions. New commercial exchanges have filled some gaps in the bilateral, but strategic elements – climate change, multilateral fora, advanced research – must be incorporated if both countries are to benefit from each other.

A distance of 17,789 kilometres separates Kolkata in India from Arequipa, Peru’s second-largest city, and few in either place know of the existence of the other. Yet, commonalities could make them twins. Both have a rich literary culture and embedded intelligentsia; they are the birthplace of Rabindranath Tagore and Mario Vargas Llosa respectively, the only Nobel laureates in literature from either country. Many colourful auto rickshaws in Kolkata and mototaxis in Arequipa are made by the same company – Bajaj. Some even share the same instruction label on how to use the three-wheeler’s steering wheel – written in Hindi. Echoes of Indian songs like “Bole chudiyan, bole kangna,” reverberate in remote corners of the vast Andes mountain range that surrounds Arequipa, in southern Peru. Not only is Bollywood music popular, but every second Arequipeño is familiar with Rishi Kapoor’s debut film Mera Naam Joker. The greatest point of convergence though, is probably Kolkata’s Mother Teresa, who goes by the Spanish name of Madre Teresa de Calcuta in all of Peru. Yet, few there recognize that Calcuta is in India.

Both countries have only recently begun to discover each other. This is attributed more to their evolving geoeconomic priorities, rather than to a focused approach to strengthen the bilateral. Since the late 1990s, both India and Peru have turned their focus to each others’ regions – India to Latin America and Peru to Asia. In 1997, recognizing the growing importance of Latin America especially for natural resources, India’s Ministry of Commerce launched the ‘Focus: LAC programme,’ to broaden commercial ties with Latin America. A year later in 1998, intending to move beyond its traditional trade routes – with the U.S. to its north, Europe to its east and intra-regional trade with Latin America – Peru joined the Asia-Pacific Economic Cooperation (APEC) to gain better access to Asia.

Unfortunately, neither India nor Peru has capitalized on these transformed economic priorities to deepen the bilateral. Though the relationship is cordial, it is purely transactional. A modest bilateral trade of $825 million (January-November 2011) has been confined to copper, vehicles and auto parts, and cotton yarn. Early Indian investors like Bajaj Auto and the Mahindra Group are well-established in Peru; new ones though, like Reliance and Jindal which have targeted Peru’s large mining and hydrocarbon sectors, have yet to see substantial returns. A few Peruvian companies have entered the Indian market; none have made a lasting impression.

Just one new entrant into the Indian consumer space, the AJE Group, owned by the Añaños family from Ayacucho, Peru, has been bold in India.  The beverage producing group which produces Big Cola, a no-caffine drink, has used access to APEC by expanding into Mexico, Thailand, Indonesia, Vietnam – and India. The first production plant in India was installed in Patalganga, Maharashtra, in December 2010 and the group plans to generate revenues of $100 million by the end of 2015 from its India operation.

Still, a large gap remains in the commercial space. Neither country has leveraged its natural advantages and needs. For instance, Peru is the world’s fifth largest producer and India is the world’s largest consumer of gold. Peru’s nascent IT sector can gain big from investments by India’s leading IT giants like TCS and Wipro, which already have a large presence in other Latin American markets like Uruguay and Brazil.

Exploring these new commercial avenues can fill some gaps in the bilateral, but strategic elements must be infused into them if both countries are to benefit from each other.

Identical views on issues of global significance can be a starting point.

First, both can leverage their fundamental agreement on issues of climate change and pollution. India and Peru are part of the 17-member group of Like-Minded Megadiverse Countries (home to 70% of the world’s biological resources) and both are signatories to the Kyoto Protocol. Both believe that big polluters must bear the major costs of carbon emission cuts, and that developing countries be allowed a degree of industrialization before their responsibility kicks in.  Just as significant is the lens that both countries, with their vast indigenous populations, use to view the future: they want to preserve traditional practices across the board, especially in agriculture, instead of using the more Western and commercially viable mono-agricultural model. The indigenous cultures are ubiquitous to India, Peru – and much of Latin America. If these nations rally their views, they can be a strong voice in international fora. Immediately, New Delhi can learn from Peru’s recently-enacted climate change and pollution laws, which aim to prevent the loss of the rich biodiversity.

A shared perspective on Intellectual Property Rights (characterized by the TRIPS agreement) and bio-piracy is the second point of strategic convergence. Peru and India both proposed amendments on the TRIPS agreement to the WTO’s Negotiations Committee in May 2006, pushing for a more stringent patenting process so as to protect traditional, domestic biological resources from international patents. Peru’s application in September 2007 to prevent Lepidium meyenii, or Maca (a root vegetable and medicinal herb which Andean communities have used for over 2,000 years) from international patents, can provide lessons for India’s patent issues against haldi and henna.

Multinational fora is a third platform for strategic engagement, viz. UNSC and APEC. In 2003, during then-Foreign Minister Yashwant Sinha’s visit to Lima, Peru extended support for India’s permanent candidature in the UN Security Council. (Peru also supports the candidature of Brazil, Japan and Germany.) India can use the collective weight of the U.S., Japan and Australia (which initially supported New Delhi’s candidature in APEC) along with support from Peru and its Latin American allies to engage more actively with the APEC bloc.

The fourth area of strategic relevance is advanced research and technologies. Though a half-dozen MOUs have been signed by the respective national centers for agricultural research and India’s ISRO and its Peruvian counterpart, neither have received much attention or produced significant results. Aggressively pursuing joint research projects, nuclear and technological transfers can add more substance to the bilateral.

Finally, more people-to-people exchanges will foster an on-the-ground understanding and appreciation for these diverse cultures. Both have refined cuisines, share a strong musical tradition and similar natural geographies – like the grand Andes and Himalayan ranges.

To facilitate these exchanges, both countries must mitigate potential risks and eliminate complexities. China is Peru’s largest trading partner; clearly Lima will side with Beijing in the case of Tibet’s sovereignty which New Delhi firmly supports. Peru will also follow its traditional partners the U.S. and EU in matters of international interventions, as it did in the case of Libya – largely due to their historical association and a heavy dependence on trade. On the other hand, as members of the Non-Aligned Movement, Peru and India both share a world view that believes in preventing conflicts and not interfering in sovereign states. Better then, for both India and Peru to use their goodwill in South Asia and South America, and leverage from each others’ geopolitical alliances.

There are other limitations too, like the lack of direct flights or regular maritime lines. High freight, insurance and tariff costs hinder a mutually beneficial exchange of goods. Tariffs for Peruvian products that enter India are as high as 32%; given the increasing demand for Peruvian agricultural imports – up 24% in 2011 – lower tariffs will go a long way in bilateral optimism. A move has already been made: in June, India allowed the import of asparagus and avocado – as significant to Peru as the mango to India.

This July, José Beraún, Peru’s Vice-Foreign Minister for External Affairs, visited India to discuss the proposed Preferential Trade Agreement between both countries. Peru already has Free Trade Agreements with a host of Asian APEC members (Thailand, Singapore, Japan, South Korea and China), as also the EU. Amidst such low or no-tariff agreements and increasing competition, Indian products will certainly find it harder to make their way to Peru, and vice versa.

The negotiators from both countries would do well to keep their mutually beneficial geo-economic interests in mind, and lessen the distance between Kolkata and Arequipa.

Hari Seshasayee is Researcher, Latin American Studies Programme, at Gateway House: Indian Council on Global Relations.

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Tags: India, Peru
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