The author: Hari Sesasaii

Source: https://www.orfonline.org/research/redrawing-india-latin-america-relations-in-the-21st-century

Photo: latinamericanpost.com

In recent years, relations between India and Latin America have received a new impetus. Minister of Foreign Affairs of India (MID) S. Jaishankar has visited four Latin American and Caribbean countries since September 2019, and in April 2023 visited four more. The last Indian foreign minister to visit the region was Yashvant Sinha, who traveled to Brazil in 2003 when the BRICS conceptual design took place (Brazil, Russia, India, China and South Africa). Having become Minister of Foreign Affairs, Jaishankar showed political will. — largely absent from his predecessors. — to improve relations between India and Latin America.

Jaishankar also sought to highlight the importance of the region to India itself, in New Delhi. At a conference on India-Latin America relations in New Delhi in February 2023, Jaishankar described his forecast of India's relations with the region as a "prognosis of India's relations with the region". «hopeful». He stressed that Latin America is part of India’s larger goal. — «become a leading world power»He added that India should establish a presence in the region. «A truly meaningful relationship, a meaningful investment and a truly remarkable collaboration. n». In April 2023, Jaishankar visits Guyana, Panama, Colombia and the Dominican Republic — Neither country has been visited by the Indian Foreign Minister on a bilateral visit.

The timing of these diplomatic moves is perfect, as India and Latin America have become more important to each other economically in recent years. Trade reached a record high of $50 billion in 2022, only slightly above the previous peak of $49 billion in 2014. This is despite India’s minimum trade with Venezuela of just $414 million in 2022, which previously reached $15 billion in 2013 and consisted almost entirely of Venezuelan oil exports to India. Venezuela has fallen out of the picture since 2020 due to secondary U.S. sanctions against the country's state oil company, Petroleos de Venezuela.

Overall, however, if Latin America were a single country, it would become India's fifth-largest trading partner in fiscal 2022-23 after the US, China, the UAE and Saudi Arabia. The growth of bilateral trade by 17% compared to $42.6 billion in 2021 can be attributed to the following reasons:

Trade of India with Brazil: In 2022, India’s trade with Brazil peaked at $16.4 billion, consisting mainly of oil trade (Brazilian crude oil exports and India’s refined petroleum products exports), edible vegetable oils, automobiles, pharmaceuticals and agrochemicals. India’s exports to Brazil in fiscal 2022-23 exceeded exports to Germany, Australia, South Korea or Indonesia — One of India’s largest export partners. Brazil is now among the top ten destinations for Indian exports, reaching $9.6 billion in 2022. This huge 54% increase in India’s exports to Brazil compared to the previous year was mainly due to a 295% increase in refined petroleum product sales. India’s imports from Brazil rose 38 percent from the previous year, helped by a 229% increase in soybean oil purchases.

The war in Ukraine changed the balance in the vegetable oil trade. A direct consequence of the war in Ukraine was a change in the structure of India’s imports of vegetable oils. For decades, Ukraine has been the largest supplier of sunflower oil to India. Shortly after Russia’s invasion of Ukraine in February 2022, India’s imports of sunflower oil from Ukraine decreased by 71% compared to the previous year.[9] India had to make up for this shortfall in vegetable oil imports, and Latin American countries such as Argentina and Brazil filled this niche. India’s imports of vegetable oil from Latin America increased from $2.4 billion in 2020 to $5.6 billion in 2022.

Growth in commodity prices and demand: Rising commodity prices and inflation have hit many consumers around the world but benefited commodity suppliers. As one of the world’s largest exporters of minerals and oil, Latin America increased its exports to India in 2022. Export of minerals from the region — in particular gold and copper ore — increased from $4 billion in 2020 to $8.6 billion in 2022.

For a long time, analysts, business and media have attributed the lack of stability in India-Latin America relations primarily to the problem of distance: Latin America is simply too far from India. However, while this may be true geographically, advances in maritime trade and aviation have facilitated the movement of goods around the world.

The real problem — Not the physical distance separating India and Latin America, but rather the distance in their perception of each other. India and Latin America often still look at each other through an outdated prism: many Indians still remember Latin American countries as former ones. «banana republics» With an unstable economy, hyperinflation and drug hotbeds, Latin Americans still often think of India as a country of spirituality and guru. Indians need to discover modern Latin America — A land of innovation in education, urban space and governance, a global breadbasket and supplier of critical minerals, and a key emerging market. Latin America should also see India through a modern lens: as a pole of global growth, a leader in technology and healthcare, a breeding ground for start-ups.

This analytical note examines how India and Latin America view each other from an economic, political and social perspective.

India's perception of Latin America

For Indian business, Latin America is in the so-called «optimal zone» ?*goldilocks zone*) — A middle ground between highly regulated, competitive markets in the US and Europe and less competitive markets in Africa with lower purchasing power. Indeed, when it comes to Indian business, Latin America is more comparable to Southeast Asia, but with higher purchasing power. In terms of per capita GDP, Latin America is currently $9,350, higher than Southeast Asia ($5,750), and higher than the International Monetary Fund’s classification for emerging markets and emerging economies ($7,300); Latin America’s per capita GDP is also more than four times that of Africa’s $2,260 (see Figure 1).

Figure 1: GDP per capita by selected regions

(Image: Graph showing GDP per capita: Africa) — $2.260; IMF Classification for Emerging Markets and Emerging Markets — $7,300; Southeast Asia — $5,750; Latin America — $9.350

This is the main lens through which Indian business looks at Latin America. — As a promising and growing space ripe for development. No Indian company can be truly global without a reasonable presence in Latin America. Moreover, the region is a sought-after market for specific sectors in which India excels, such as automobiles and vehicles, pharmaceuticals, information technology and services, and energy. Thus, it is not surprising that India exports more to Brazil than, for example, to Australia or Indonesia (see Table 1).

Table 1: India's exports to selected countries (April 2022 to January 2023)

The presence of the Indian private sector in Latin America is noticeable in the annual turnover of almost $50 billion, as well as in the total investment of $16 billion. — Almost all of them have been made in the last two decades. These investments may not be as high as those from China, the US or Europe, but they are notable as they create thousands of jobs in the region. — More importantly, in value-added sectors, mainly in manufacturing and services. In certain sectors such as pharmaceuticals, IT and vehicles, India often outperforms China, which remains the largest trading partner for most South American countries. Throughout the twenty-first century, India exported more pharmaceutical products to Latin America than China, although this changed in 2021 due to China exporting COVID-19 vaccines to Latin America. Perhaps most important is India’s technological presence in Latin America, with Indian IT companies employing more than 40,000 people in the region, almost all of them local.

As a result, it is business and economics that drive the relationship between India and Latin America. India’s private sector continues to view Latin America favorably, identifying the region as one of its major growth markets.

Politicians in New Delhi have paid little attention to Latin America, as the country has no deep political or strategic interests in the region. Latin America rarely intervenes in geopolitics, no country in the region possesses nuclear weapons, and the region has not had wars between countries since the late nineteenth century. Consequently, Latin America has historically been pushed to the margins of India’s foreign policy priorities, to the last of the three concentric circles of its foreign policy.[1b] In recent years, however, New Delhi’s political interests in Latin America have changed in two ways:

*   Functional change: India's Foreign Ministry kept the Latin American region at arm's length. The region is administered by India’s Minister of State for Foreign Affairs, a junior minister who works alongside the Foreign Minister. This changed in 2022, when the three member countries of the Group of Twenty — Argentina, Brazil and Mexico — They were placed under the direct authority of the Minister of Foreign Affairs of India. Since then, the Indian foreign minister has visited all three countries and interacted more deeply with each at numerous venues. «Groups of twenty»It is chaired by India in 2023.

* High-level dialogues: Foreign Minister Jaishankar visits eight Latin American countries so far — This is an unprecedented number, giving impetus to ties between India and Latin America. A number of Latin American leaders also visited India in 2022 and plan to do so in 2023. These visits are usually accompanied by meetings of business and civil society representatives from both sides. This renewed political interest can be used to build new ties and strengthen bilateral relations in the long term by establishing mechanisms for continued engagement between India and Latin America.

While these positive developments are welcome, two challenges remain. First, New Delhi has yet to formulate a mechanism for interaction with the Latin American region as a whole. — or even meaningful engagement with sub-regional groups such as the Central American Integration System (SICA), the Pacific Alliance, and the Community of Latin American and Caribbean States (CELAC). This will remain difficult until Latin America achieves its long-standing goal of regional integration. Until then, India should focus on bilateral relations with individual countries in the region. It should also deepen relations with SICA, CELAC, Mercosur, the Pacific Alliance, and the Andean Community through regular dialogues.

Second, New Delhi has yet to show the political will to strengthen economic relations with the region, primarily through the signing of free trade agreements (FTAs). Existing preferential trade agreements (PCAs) that India has with MERCOSUR and Chile remain limited in scope; they are not as comprehensive as India’s FTAs with South Korea, Japan or ASEAN. This is despite the fact that India’s trade with Mercosur has already exceeded its trade with Japan. While Latin American countries are seeking to upgrade their PTS with India to a full-fledged FTA, New Delhi has yet to signal its interest.

The distance between India and Latin America is perhaps most acutely felt in the social interaction of both sides, which has been infrequent and limited. Some historical exchanges between India and Latin America in the nineteenth and twentieth centuries are notable: they include contacts between people of India and Mexico, such as Pandurang Khankhoje, an Indian agronomist who played a key role in the development of agricultural practices in Mexico; and M. N. Roy, an Indian political activist who founded both the Indian and Mexican Communist parties. There was also a constant exchange of goods, people and ideas between Portuguese colonies and enclaves in India and Brazil. India and Latin America have also seen a rich exchange of literary ideas through poet-diplomats and authors such as Octavio Paz, Rabindranath Tagore and Victoria Ocampo, whose works have helped shape mutual perceptions.

In the twenty-first century, there is a resumption of social exchanges. One example. — Indian poet-diplomat Abhai K., author of poetic books about the Latin American region, such as «Alphabets of Latin America» and «Brasilia prophecy». Abhay K notes: «From Tagore and Victoria Ocampo to Cecilia Meireles and Octavio Paz, poets and writers have played a crucial role in building literary bridges between India and Latin America. This tradition has gained momentum in recent years with an increase in literary exchanges and has contributed significantly to the deepening of the understanding of India in Latin America and Latin America in India.».

These social exchanges have gradually increased in the twenty-first century, and there remains great potential to learn more about each other. After all, India and Latin America face some similar complex challenges across sectors, including financial inclusion, gender equality, poverty reduction, and the eradication of systemic corruption. India can and should learn more about Latin American concepts. «*buen vivir*» (literally) «goodness») — A concept borrowed from the indigenous peoples of Latin America that emphasizes the need for a more environmentally sustainable society; India’s central and regional governments can also learn from Latin America’s experience with conditional cash transfers (CCTs), given that the region is a pioneer in this field in the world and has more than three decades of experience in implementing such programs; finally, India can learn from the region in the field of biodiversity conservation and renewable energy programs.

The growth of contacts between the people of India and Latin America is also noticeable in the presence of more than 90 Latin American footballers in the local football tournament of India, the Indian Super League, as well as the increase in the number of Latin American models and actors in the large and growing Indian entertainment industry.

To be sure, distance can often be an impediment to increased social interaction between India and Latin America, which is perhaps most tangible in high travel costs. It is also often difficult for Indians to obtain business or tourist visas to travel to Latin America. Still, India enjoys a huge amount of goodwill in Latin America, and that could play a role in the long run.

From an economic point of view, India experienced a renaissance in the twenty-first century. India’s economic growth is part of the overall history of the Global South, of which Latin America is an integral part. Today India — This is a huge market that no country can afford to ignore. It is also a means of economic diversification, very different from the economies of the Americas, Europe and Africa. For Latin America, India is part of a broader, comprehensive Asian strategy. Soraya Caro, an adviser to Colombia’s Supreme Council for Foreign Trade, said in an interview that the Colombian government has for the first time begun prioritizing Asia and India as a strategic and economic counterweight to the country’s traditional partners in the West.

India’s economic importance to the Latin American region has become most apparent in the past two decades. Since 2012, India has been among Latin America’s top ten export markets in the world; in 2014, India was Latin America’s third-largest export destination after the US and China. The region counts on India as a key partner for economic growth, as an importer of minerals, energy and agricultural products in the region, and as an investor and job creator in Latin America. Today, India is the largest export destination for vegetable oils from the region, the third largest for copper ore, oil and gold, and the fourth largest for sugar and wood.

While the vast majority of Latin America’s exports to India continue to be commodities, this trend has gradually reversed over the past decade as the region begins to export more value-added, finished products to India; from electronics made in Mexico to processed foods from Brazil, wine from Argentina and fresh fruit from Chile. India has also become an important investment destination for Latin American companies, especially for the United States. «Multilatinas» Latin American multinational companies seeking to enter the large consumer market of India. Companies like Cinépolis from Mexico — The largest Latin American investor in India — They made a long-term bet on India. More than three dozen Latin American companies have set up operations in India, investing nearly $2 billion over the past two decades. Javier Sotomayor, Managing Director of Cinépolis Asia, attributes his company’s 15 successful years in India to economies of scale, demographics and social stability.

Both trends — Latin American Value Added Products and Latin American Investment in India — India is growing and will gain additional momentum in the coming decade in parallel with India’s economic growth and the expansion of its middle class.

Given India’s size and global profile, Latin American countries have always shown a political interest in deepening relations with India. Latin American and Caribbean heads of government have visited India more than 30 times since independence. — This is far more than reciprocal visits from India, where only four prime ministers have visited the Latin American region, and often for multilateral forums rather than bilateral state visits.

Yet Latin American politicians and governments have become more inclined to strengthen their countries’ relations with India. Brazil is by far the Latin American country with the closest political ties to India. This is partly due to Brazil’s membership in multilateral organizations such as BRICS, IBSA (India, Brazil and South Africa), and «Group of twenty». Two other Latin American members «Groups of twenty» — Argentina and Mexico — India also received more attention last year in connection with India’s chairmanship of the group. The foreign ministers of Argentina, Brazil and Mexico visited New Delhi as recently as early as 2023 and are continuing their ongoing dialogue with their counterparts in India. Peru’s Ambassador to India, Javier Paulinich, who is in the country for the second time, said India and Latin America benefit both from economic complementarity and diversification and from shared values such as democracy and social development.

The political will of Latin America was also evident in the signing of the PCA between India and Chile, as well as India and Mercosur. Both Chile and MERCOSUR intended to sign a broader FTA with India, but agreed to a PTA that could later be modernized. Although the India-Chile and India-MERCOSUR PTAs have been upgraded, they are still less robust than the FTA; the South American capitals of MERCOSUR and Chile will continue to lobby for a more meaningful FTA with India.

Recently, India and Latin America have also intersected in a rather new form of non-alignment. — what New Delhi calls «strategic autonomy»and Latinos — «Active non-alignment» (Active Non-alignment, ANA) In his book «Latin American Foreign Policy in the New World Order: Active Non-Alignment» Chilean authors Jorge Heine, Carlos Fortin and Carlos Ominami note that ANA — it «It's not about translating a monotonous approach that originated in the 1960s and 1970s into a completely different new century. On the contrary, the challenge is to adapt concepts and terms rooted in another era to the realities of a rapidly changing world, with the necessary corrections and adjustments.».

Throughout 2022 and 2023, India and Latin America maintained similar positions of active non-alignment regarding the war in Ukraine. They prefer to focus on protecting their national interests and mitigating the overall economic effects of war on inflation and interest rates.

The social perception of India by the Latin American region began to be shaped by numerous literary and political figures during the twentieth century. Perhaps the most important figure is Octavio Paz, a Mexican poet-diplomat whose book «Vislumbres de la India» ?«In the light of India») remains one of the first points of knowledge about India for Latin Americans. Paz, who served as ambassador to India from 1962 to 1968, writes: «Everything I saw (in India) was a revival of the forgotten paintings of Mexico.».

Many Latinos are also familiar with Rabindranath Tagore, who spent two months in Argentina in 1924. Tagore's literary works are available in Spanish and distributed throughout the region through translations by Mexican philosopher Jose Vasconcelos. Tagore’s relationship with Victoria Ocampo remains a subject of interest even today, as seen in a recent film by Argentine director Pablo Cesar. «Thinking about him.». Another prominent Indian figure in Latin America is Mahatma Gandhi, whose teaching on nonviolence remains relevant today and is popularized by organizations such as Palas Athenas in Brazil. In the 1960s, Latin Americans met a political figure from India. — Prime Minister Indira Gandhi visited eight countries in Latin America and the Caribbean in 1968, at a time when women and heads of government were rare.

India’s image has gradually changed in Latin America in the twenty-first century, but most people in the region are still unfamiliar with the modern reality of India. Brazilian Telenovela «Caminho das Índias»aired in 2009, gave Brazilians a general glimpse of the clash of historic and modern India; it became so popular around the world that it even won an award. «Emmy.» In 2009. Although Latin Americans are discovering more about India in the twenty-first century, there is still some way to go before India enters India. «map» people in the region. «India’s presence in Latin America cannot be compared to that of other Asian or European countries, let alone the United States. Much more needs to be done before India can attract the attention of the general public in Latin America.». — noted «The use of goodwill in Latin America «soft-power»» Rupkatha magazine.

Back in the late twentieth century, India was a distant, insignificant market for Latin America, and the Latin American region remained far beyond India’s priorities, whether economic or political. This has changed quite suddenly and dramatically in the twenty-first century. Today, India is among Latin America’s most important trading partners, and the reverse is also true. — If the region were a single country, it would become India’s fifth largest trading partner.

While the ties between India and Latin America were initially shaped by business and the economy, the government’s supportive role could spur deeper and broader relations, as well as rethink perceptions to reflect a more modern reality. Latin America will continue to play a role in India’s ambitions to become a global power and remain a part of the world. «optimal zone» for Indian business. A growing number of Indian companies are admitting they can't really be «global»without a reasonable presence in Latin America.

Ambassador R. Vishwanathan, a former Indian diplomat and Latin American consultant to Indian companies, noted in a recent interview that Latin America sees India as a hedge against the region’s excessive dependence on either China or the West. He adds that Indians and Hispanics share emotional and cultural similarities and face similar developmental challenges.

It would be in New Delhi's interest to closely follow Latin America and work on two specific issues. First, upgrade the current PCAs from Chile and MERCOSUR to FTAs, and sign new comprehensive trade agreements with other countries in the region, such as Peru, Colombia and Mexico. Second, New Delhi should seriously consider Latin America as a supplier of lithium and copper, which are indispensable commodities needed for the transition to a sustainable economy. «green» energy. While some problems in relations between India and Latin America still persist, such as the lack of financing and direct trade routes, the main problem remains the misperception and lack of knowledge between India and Latin America. Recent political moves and visits by senior officials between India and Latin America are positive signals. Still, much more needs to be done to realize the full potential of India-Latin America relations, but the twenty-first century has begun with promise.

Hari Seshasaya. — Visiting Researcher at ORF. He is an expert on Asia-Latin America (United Nations Development Programme) and an advisor to the Office of Senior Officials of the Ministry of Foreign Affairs of Panama.

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[a] *Note: This article was written before the Minister’s visit. The visit to Panama did not take place.*

[b] *The foreign policy doctrine of India, based on concentric circles, where the first — immediate neighbors, the second — Expanded Neighbourhood and Key Partners, Third — The rest of the world, including Latin America.*

[c] *Common Market of South America.*