Politics, Business & Culture in the Americas

Is 2015 the Year for India in Latin America?

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All eyes have been on U.S. President Barack Obama’s recent state visit to India, where he and Indian Prime Minister Narendra Modi met amidst the excitement and pageantry of the country’s annual Republic Day. The two, who have met twice since Modi’s arrival in office in May of last year, announced a deal on civilian nuclear projects, progress on tackling climate change and cooperation in defense, as well as a $4 billion commitment from the United States in trade and investment promotion. 

While the U.S.-India relationship appears to be blossoming, it is also important to look at India’s global role and positioning vis-à-vis the Western Hemisphere. Prime Minister Modi has only made one trip to Latin America and the Caribbean since entering office. He visited Brazil last summer for the 6th BRICS Summit, but unlike the leaders of China and Japan, who took multi-country whirlwind tours and promised to invest billions throughout the region, Modi did not venture outside of Brazil. Nor has one Latin American leader visited India on an official state visit over the past two years.

Modi has been working tirelessly to change India’s global image by tackling hygiene, fighting corruption, and revamping state-level systems to promote exports in order to turn around the faltering economy.  India’s GDP growth has been stalled around 5 percent for the past few years, but recent projections by the World Bank estimate a GDP growth rate of 6.4 percent in 2015, possibly outpacing Chinese growth in two years.

Latin America has the ability to play an important role in this economic and political transformation for India. Trade, energy and geopolitical relations are key areas for strategic cooperation between the two regions.

Since 2009, India has signed a plethora of trade deals with its neighbors in Asia—including Japan, Korea, Malaysia, and ASEAN (Association of Southeast Asian Nations)—and has begun negotiating trade agreements with the European Union, Canada, Israel, and Chile, among others. While India has preferential trade agreements with Chile and MERCOSUR, India does not have free trade agreements with any country in Latin America or the Caribbean.

For Latin America, India presents an enormous export opportunity, due to the vast size of India’s middle class. But beyond exports, India has a highly experienced tech sector, service industry, and culture of education and innovation—from which Latin American countries can learn. The reverse is also true: Latin America has a wealth of knowledge to share in the areas of creative conditional cash transfer programs for the poor, innovative conventional and sustainable energy technologies, and agroindustry machinery and best practices.

Last year, representatives of the Pacific Alliance met with Indian Minister of State of External Affairs General V.K. Singh to encourage India to become more active in the alliance countries. India is already an “observer state” of the Pacific Alliance, as are a handful of other Asian countries, including China, Japan, South Korea, and Singapore.  India has a handful of major companies present in the region, such as Hero MotoCorp, Tata Group, Wipro, Infosys and Reliance Industries and potential for much more expansion.  Moving ahead with formal trade and investment agreements in 2015—especially with Pacific-facing Latin American countries—should be seriously considered by the Indian government, as the economic bloc can serve as a springboard for trade and investment with other Latin American nations.

India continues to face a major energy crisis, which is hampering the country’s ability to improve the manufacturing sector and grow the economy. In 2012, the country was home to the largest blackout in human history, affecting 600 million people (double the population of the United States). Fortunately, the Western Hemisphere is one of the most energy-abundant regions in the world. With the United States’ recent energy boom, countries like Mexico, Colombia and Trinidad and Tobago are looking for other markets to export their oil and natural gas.

India has already started to fill in the gap. Just last year, India became Colombia’s second largest oil export destination. In addition to fossil fuels, Latin America has one of the cleanest energy matrixes in the world. Latin American and Indian capacities in the green energy space may be an area of mutual cooperation as they move to ease their energy crisis.

Brazil and India, the two giants of their respective regions, have a unique and important relationship. Though located half a globe away, both Brazil and India rank among the largest democracies and economies in the world, and share similar development goals. One of Modi’s first trips as prime minister outside of Asia was to attend the 2014 BRICS Summit in Brazil. And Brazilian President Dilma Rousseff is expected to visit India for the IBSA (India-Brazil-South Africa) Summit in 2015. 

Yet considering their size, the amount of trade between India and Brazil remains miniscule, at only around $10 billion, compared to $83 billion in total trade between Brazil and China. There is potential for further cooperation in the areas of agriculture, biofuels, IT, education and energy. Upcoming events in 2015, such as the IBSA Summit in India, may offer opportunities for further discussion.

Given India’s history of trilateral cooperation, there is also a possibility for the United States to play a role in fostering Indo-Latin ties. In a recent article, Congressman Eliot Engel supported U.S.-India multilateral cooperation in the Americas, including inviting a senior Indian official to the Summit of the Americas in Panama this April or developing a trilateral dialogue with the Pacific Alliance.  Based on India’s observer status at the Organization of American States, attending the summit could be yet another way to positively engage with the region.

Between multilateral forums, potential state visits, prospective trade agreements, and energy cooperation, there is plenty of room for the India-Latin America relationship to advance in 2015. With China and Japan’s diplomatic and commercial eagerness in the past year and Prime Minister Modi’s knack for pomp and circumstance, now is the time for India to make a move.

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