India Intensifies Engagement with Latin America

Recently concluded EAM Jaishankar’s visit to Latin American countries- Brazil, Argentina and Paraguay underscores New Delhi’s interest to energise ties with the region which has immense scope for bilateral cooperation. The ongoing Russian war on Ukraine has heightened the concerns about energy and food security. The emerging economies of Latin America besides being breadbasket and endowed with rich natural resources have solutions for a spate of global uncertainties and supply chain disruption.

During the initial stages of the Ukraine crisis, to mitigate the disruption of sunflower oil supplies, India increased Soybean oil imports from Brazil. India accounted for nearly 72.3% of Brazil’s Soybean oil exports. Seeking to supplant the uncertain Palm oil and Sunflower oil imports, India is adroitly sourcing Soybean oil from various parts of the world and Brazil and Argentina emerged as major destinations¹.  Latin America is a major commodity market and India sources its crude oil, lithium, gold, and copper imports from the region making it absolutely vital for energy security as well.

Recently, there has been a growing clamour about China’s increasing sway over Latin America, former head of the US Southern Command, Admiral Faller 2021 argued, “we are losing our positional advantage in this Hemisphere and immediate action is needed to reverse this trend”. A few days ago, Council for Foreign Relations, in its report, expressed similar concerns over China’s growing footprint in Latin America considered the strategic backyard of the US². China is now the second largest trading partner of Latin America after the US. With reports of China intensifying mining collaboration with the Lithium triangle- Argentina, Chile and Bolivia, the US is now growing wary of Beijing’s increasing diplomatic, cultural, military and trade presence in Latin America.

China’s role in forcing five Latin American countries- Panama, Costa Rica, Dominican Republic, El Salvador and Nicaragua to sever diplomatic ties with Taiwan has only heightened the US apprehensions of Beijing’s burgeoning influence in its backyard.

Catering to the vaccine and medical supplies requirements while China has met the emergent needs of the Latin American countries during the pandemic, disruption of critical supplies and overdependence on Beijing has become a cause of concern for Latin American countries. Post-pandemic, like all other countries, even the Latin American countries realised the need for decoupling of trade with China and diversification of supplies.

Indeed, while Latin America’s ties with the US and China grabbed all the attention, India is also an important player in the region. The cumulative Indian investments in Latin America totalled $12-16 billion though minuscule compared to China’s $156 billion are creating more jobs per a million dollars of investment. Indian investments are not directed by the government. Private companies are major players in Latin America in sectors of manufacturing, automobiles, pharmaceuticals and information & technology. China’s main focus has always been on sourcing commodities with major investments in the mining sector, India plays a major role in value-added services.

Unlike China’s investments in the region, Indian private companies are operating in Latin America by creating more jobs and are winning the acclaim of the host countries. Devoid of notable civilisational links, private players are now building bridges between India and Latin America with the government playing a supporting role. Consequently, despite intermittent high-level visits, which hardly grab any intention, India is slowly garnering goodwill in the region.  India’s soft power attributes like Yoga and Ayurveda are very popular in Latin America.

Latin America’s not-so-highly regulated markets, growing middle class and high purchasing power offer immense economic opportunities for India. India, on the other hand, is an important export destination and a major market for investments. Latin America which often reels under the cycle of drastic price fluctuations of commodities is seeking to shift its economy to services and marketing sectors which are relatively stable and generate employment. By collaborating with India, Latin America prospectively aims to diversify its commodity-reliant economies.

Geopolitically, sandwiched between two global powers, the US and China, Latin America can effectively hedge its bets by forging close ties with India. Additionally, India-Latin America ties can provide a fresh impetus to the South-South cooperation. Interestingly, India’s exports to the distant Latin American countries are higher vis-a-vis countries in the neighbourhood³. Unlike China, while India doesn’t have a dedicated Latin America policy, India has potential markets in the region and a concerted effort to clinch FTAs can strengthen the existing economic linkages.

Though India has a Preferential Trade Agreement (PTA) with Chile and MERCOSUR, (MERCOSUR is Southern Common Market and includes Argentina, Brazil, Paraguay, Uruguay, Bolivia and Venezuela) its scope is limited as it doesn’t include investments, services, duty-free access like FTA or CEPAs (Comprehensive Economic Partnership Agreements).

One of the major aspects of Jaishankar’s Latin America visit has been expanding the scope of India-MERCOSUR PFA and negotiating tariffs to promote trade. On his visit to Paraguay, the first ever by any Indian foreign minister that has ever occurred, marking the 60^th anniversary of the establishment of diplomatic ties, Jaishankar inaugurated the Embassy of India at the Paraguayan capital Asuncion. In his talks with his counterpart, both countries agreed to strengthen cooperation in trade and commerce, agriculture, pharmaceuticals, traditional medicines, technical and development cooperation, solar energy and MERCOSUR and affirmed to promote a rules-based international order⁴.

At the 8^th Brazil-India Joint Commission, Jaishankar and his counterpart recognised a 63.5% increase in trade between the two countries, making India currently the fifth biggest trade partner of Brazil. Both countries which are cooperating on various multilateral forums- IBSA, BRICS, G20 and G4 have agreed to work towards the establishment of the India-Brazil alliance on bioenergy and biofuels. Brazil post has released a commemorative stamp on India’s 75 years of Independence⁵.

In line with India’s continued engagement with Argentina which received fresh impetus following a bilateral meeting with PM Modi and Argentinian President Alberto Fernandez along the sidelines of the G7 and foreign minister Santiago Cafiero, Jaishankar held wide-ranging talks with his counterpart. Cafiero on his four-day visit to New Delhi addressed the Raisina Dialogue in April, held meetings with high-level officials and businessmen, visited institutions and sought Indian support for the Commission on Malvina Islands.

India and Argentina elevated ties to Strategic Partnership in 2019 and at the joint commission meeting in Buenos Aires, the countries sought to expand the scope of the partnership to include defence cooperation- promoting the exchange of visits between armed forces, defence training and joint production of defence related equipment and agreed to develop payment mechanisms to trade in local currencies. India is now Argentina’s fourth biggest trade partner. Argentina has also expressed interest in India’s Tejas fighter jets.

The nuclear commissions of India and Argentina forged a nuclear energy partnership in 2019 for cooperation in the use of nuclear energy for peaceful purposes. India’s BARC in collaboration with Argentina has set up Molybednum-90 (Mo-90) which is useful for nuclear medicine. Atomic energy boards of both countries are seeking the early conclusion of an MoU on nuclear safety.

Besides the joint implementation of a framework agreement on cooperation in Peaceful Uses of Outer Space, countries are strengthening Antarctica cooperation, collaboration in space, information technology, science and technology, infrastructure development, mineral resources, and conventional and renewable energy. Aflush with natural reserves of Lithium, quintessential for energy transition, Argentina is an invaluable partner for India’s renewable energy goals.

Argentina currently holds the rotating presidency of CELAC (Community of Latin American and the Caribbean States), currently the chair of the Nuclear Suppliers Group (NSG) and Human Rights Council. While Argentina backed India’s membership in NSG, India supported the resumption of negotiations on the sovereignty of the Malvinas Islands⁶. Argentina has applied for BRICS membership and India has backed its candidature.

During his visit, Jaishankar emphasised the importance of making Latin America a business hub and held meetings with various stakeholders, business leaders and entrepreneurs. Stating that “Business is the ballast that provides steady sailing for relationships” he reaffirmed of opportunities for significant business cooperation.

All set to assume the G-20 Presidency later this year, India is now actively engaging with all the countries on board for successful deliverance. Being fellow democracies, Latin American countries, which have more in common are highly appreciative of India’s assertive leadership of strategic autonomy. India’s position on Ukraine, the Indo-Pacific, vaccine assistance during the pandemic and resolute defending of borders against China’s incursions were praised by these countries. At a community event in Sao Paulo, Jaishankar said that China is disregarding all the border agreements and casting a shadow on the bilateral ties. With decisive leadership and buoyant economic growth, India is now looked at as a responsible country.

To elevate ties and take them to the next level, India must prioritise its engagements with the region. Besides, setting up new diplomatic missions, due attention must be given to high-level visits to and from the region. Presidential, Vice-Presidential and other ministerial visits to the region are often unnoticed. Minister of State for External Affairs, Meenakshi Lekhi’s visit to Panama, Honduras and Chile remained a low-key affair due to emblematic indifference. To imbibe an element of cordiality and importance, India must work on these barriers as well.

India’s concerted attempts to expand its horizons to maximise the untapped economic potential through viable partnerships with Latin American countries is certainly an encouraging move and bodes with the country’s ambitious goals of becoming a developed economy by 2047.

@ Copyrights reserved.