A better barter

Strengthening India-Latin America relations through trade.

The 9th CII India-Latin Americana and Caribbean summit, held in New Delhi, aimed to strengthen South-South cooperation during India’s G-20 presidency, reflecting India’s growing interest in the Latin American region. Subrahmanyam Jaishankar, India’s foreign affairs minister, visited Guyana, Panama, Colombia and the Dominican Republic, underlining India’s desire for a regional presence to support its global ambitions. Jaishankar’s participation in the Latin America-India forum in Panama highlighted Latin American countries’ willingness to expand trade and investment ties with India, which reached a record USD 50 billion in 2022, marking a 17% increase from 2021. Latin America is now India’s fifth-largest trade partner, trailing only behind the US, China, UAE and Saudi Arabia. 

Despite this growing enthusiasm for enhanced business relations, significant political challenges must be navigated by both sides. Mutual recognition of each other as crucial partners for economic growth is vital for forging synergies, especially in sectors like minerals, energy and agriculture. A Brazilian geopolitical expert, lecturer and researcher noted that “until 2020, the main export product to India was oil. But the rise in the price of gold, plus geopolitical instability, is leading central banks to take refuge in this metal and India is buying more aggressively than before.” Such collaboration could bolster Latin America’s exports to India, encompassing further commodities like vegetable oils, copper, petroleum, sugar and food products. 

To maximise this potential, leaders from both regions must invest in supply chains to overcome existing sourcing limitations. This effort would result in production diversification, reinforcing trade in food and energy. A former official from the Ministry of Economy and a foreign trade adviser in Mexico observed that “trade between Mexico and India has steadily increased over the past decade,” positioning Mexico as a significant Latin American hub for Indian goods. This underscores how strategic resource partnerships could offer an alternative to China’s dominant trade presence in Latin America.

“trade between Mexico and India has steadily increased over the past decade… however, trade potential remains largely untapped, as India accounts for only about 1% of Mexico’s imports.”

A former official from the Ministry of Economy, Mexico

Additionally, the former Ministry of Economy official noted, “Mexico has benefitted from importing vehicles manufactured in India, with around 40% of vehicles in the Mexican market having connections to India.” However, trade potential remains largely untapped, as India accounts for only “about 1% of Mexico’s imports.” Collaborative opportunities in technology beckon, capitalising on the situation that “China is encountering barriers from the United States and there is always pressure from the northern border (USA) for Mexico not to be so close,” which could potentially influence Asian relations. 

Amidst global conflicts and commodity price hikes, New Delhi has a unique opportunity to realign its global priorities by fostering dialogue with Latin America. As recognised by a former official from Mexico’s Ministry of Economy, “India is now an important trading partner”. Engaging with regional blocs such as the Community of Latin American and Caribbean States, Mercosur, the Pacific Alliance and the Andean Community could serve as the pathway for establishing robust business and trade connections soon. Geopolitical motives drive Latin American leaders, like President Lula, closer to India, seeking BRICS (a grouping of the world economies of Brazil, Russia, India, China, and South Africa) bank funding amid shifts in global dynamics. “The biggest interest I see in approaching India is the BRICS,” reported Brazilian geopolitical expert and researcher. “It is not purely ideological. It is looking for a way out of the still gigantic presence of the IMF.” 

“The biggest interest I see in approaching India is the BRICS … It is not purely ideological. It is looking for a way out of the still gigantic presence of the IMF.”

Brazilian geopolitical expert and researcher

In a world marked by ever-shifting geopolitical currents, the evolving partnership between India and Latin America stands as a beacon of opportunity. This dynamic engagement carries the potential for fostering economic cooperation that not only transcends borders but also promises shared prosperity. As both regions navigate the complexities of global affairs, their collaboration holds the key to unlocking a new era of mutually beneficial growth and innovation. 

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