India scales up ties with distant Latin America

Posted on 25th Feb 2015 by mohit kumar

New Delhi, Feb 25 (IANS) Distance is no bar as India seeks to majorly scale up ties with Latin America and the Caribbean, the source of 20 percent of this country's crude imports, given China is far ahead in its engagement with the region that has a combined GDP of over $5.5 trillion and has shown resilience in the face of the global economic downturn.

Right from the time Prime Minister Narendra Modi met the leaders of 11 Latin American countries last July on the margins of the BRICS Summit in Brazil, the new government has kept up a steady engagement with high-level visits. A visit to the region this year by External Affairs Minister Sushma Swaraj is being considered.

With the Modi government's push for closer engagement, India's ties with Latin America have received "a clear direction in 2015", an official told IANS.

India imports 20 percent of its crude from Venezuela, Columbia, Mexico and Brazil. Venezuelan heavy crude is processed at Jamnagar in Gujarat and at the Mangalore refinery. In 2012, India overtook China as the largest Asian buyer of Venezuelan crude.

While India is gradually building its ties with the region, China has already moved fast. On Jan 8-9, 2015, Beijing hosted the first ministerial-level forum with the 33-member Community of Latin American and Caribbean States (CELAC), during which China projected that two-way trade could double over the next decade to $500 billion, while Chinese investment may reach $250 billion.

In comparison, India's trade with LAC has grown from less than $2 billion in 2000-01 to $46 billion in 2013-14.

The advantages of close commerce with the Latin America region are many. Besides the over $5.5 trillion combined GDP, it has a population of around 600 million, and six percent of the world's merchandise trade. It received US$179 billion of FDI in 2013, the highest record for any region in the world and is also a peaceful region, with few inter-state conflicts.

India held its first India-LAC Investment Conclave in October last year to tap the economic potential of the Latin America region.

The investment conclave was attended by 23 countries of the region.

Unlike China that is pouring in billions of dollars in infrastructural investment in the energy and commodity-rich region, India - like in Africa - is taking the human resource route by upgrading skills and imparting technological education to the needy population in some of these countries.

Modi has directed that India reach out to the region by setting up centres of excellence in IT. This is already being done in Peru and Ecuador while a new one is planned in Guyana, an official source.

Under this, the Indian government funds the project, sets up the hardware and also provides training in IT to people of the country concerned so that they become self-sufficient and can move ahead on their own.

India is also setting up vocational training centres in Jamaica and Belize.

India's engagement with the region has been taking place on a quiet note.

In the latest, Minister of State for External Affairs Gen. V.K. Singh (retd) visited Jamaica Feb 17-19 during which India offered a $15 million line of credit. India, a cricket loving nation, has also provided the floodlights at the famous Sabina Park Cricket Stadium in Kingston.

A few days before that, Gen. V.K. Singh visited the Dominican Republic, which is set to become the head of the 33-member CELAC in 2016. The Dominican Republic is also a member of the Central American Integration System (SICA), an economic and political grouping of eight Central American states, which has Japan and China as extra-regional observers.

In January, India and Suriname held the Fifth Joint Commission Meeting in Delhi.

In October, India and Mexico held their sixth Joint Commission Meeting, which was co-chaired by External Affairs Minister Sushma Swaraj and her Mexican counterpart Jose Antonio Meade Kuribrena. It was the first time that the JCM was held at the ministerial level since it was established in 1984.

A few days before that in mid-October, the foreign minister of Guatemala, a member of SICA, was in Delhi to interact with Sushma Swaraj.

On the sidelines of the UN General Assembly in September, Sushma Swaraj attended the India-CELAC Quartet meeting with her counterparts from Cuba, Costa Rica, Ecuador and Antigua & Barbuda. She proposed that both sides hold an India-CELAC Business Council and India-CELAC CEOs forum soon to boost trade ties.

In December last year, India and El Salvador held their Foreign Office Consultations. El Salvador is a member of SICA.

In August, India and Ecuador held the fourth round of their Foreign Office Consultations. Ecuador is the current chair of the 33-member CELAC.

Modi has also met Guyanese President Donald Ramotar, when the latter attended the last Pravasi Bharatiya Divas, the annual convention of the Indian diaspora, as chief guest.

(Ranjana Narayan can be contacted at ranjana.n@ians.in)