Financial Daily from THE HINDU group of publications
Saturday, Jun 19, 2004
Industry & Economy
`India, Brazil must exploit trade potential'
New Delhi , June 18
TO tap the huge trade potential between India and Brazil, the Federation of Indian Chambers of Commerce and Industry (FICCI) has said that the two countries can exploit resource advantages, arbitrage the development curve, leverage select technology leads, partner to attack common markets and build local businesses.
"There are immense opportunities which both the countries cannot afford to miss. Brazil and India can profitably engage in the business of ethanol, pharma and automotive industry," Dr Amit Mitra, Secretary General, FICCI, said.
Sharing the outcome of the meeting jointly organised by FICCI and Unctad, at the Unctad Regionalism and South-South Cooperation conference recently held in Brazil, Dr Mitra said, "Latin-America and India represent best mutual opportunities for both to move beyond low-cost exports."
Exports between Indian and Brazil are still small at $200 million and are moving at a slow pace if oil products are left out. Even if oil related products are included, imports from India today represent about one per cent of the total Brazil imports versus about four per cent in case of China.
Several market segments such as durables, retail and consumer goods in India need to be opened up for Brazilian entry. Outlining the opportunities, which Indian businesses enjoy, he said, "In Latin America, Western style markets are yet to be fully developed. Due to structural reasons the market in Brazil has weak local industries and India can tap the areas where it could be strong."
Engineering goods is one such area offering big opportunity as Brazil sources them from high-cost economies while India has well formed capital goods base, he said. The companies already active in Brazil are Bajaj, Elgi and Thermax.
Further, India's competitive advantage in pharma and bulk drugs offers opportunities and challenges for the domestic drug companies especially in branded generics, dis-intermediation, and patented drugs. Indian companies currently active there are Ranbaxy, Torrent, Dr Reddy's, Aurobindo and Strides-Arcolab.
High technology and software are another area, which can be tapped, Dr Mitra said. India's strength and reputation in software areestablished and India's US clients need for alternative location can been taken care of, he said. The Indian companies currently active in Brazil are Aptech, NIIT, Zee Interactive and TCS.
Commenting on the relationships between Mercosur and India, he said, there is scope for more trade and investment as well as technological cooperation between the two. `South-South' is a window of opportunity and not a substitute for developed markets, he said. In fact, the Reliance group is looking at setting up a polyester fibre plant in Mercosur.
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