The Hindu Business Line : Reaching out to Brazil

With seven accords signed between India and Brazil during the visit of the Brazilian President, Mr Luis Inacio Lula da Silva, to New Delhi — at the head of a 100-strong business delegation — there is little doubt that the exercise was a success. Among the accords signed, two stand out, namely, that between the oil companies ONGC and Petrobras and that which will enable ISRO to develop the Brazilian earth station to receive signals from Indian remote-sensing satellites. Both the Indian oil sector and the space effort are in a high-growth phase and the ties with Brazil are expected to lend further practical teeth to what has been already been achieved.

The agreement on setting up a CEOs' forum is also important from the point of view of expanding the interface between the trade and commercial spheres of both sides. But, though its potential in increasing bilateral trade is immense, there is no guarantee that the desired results will follow. The problem is that, apart from ethanol production in Brazil and its export to India, there is perhaps no other single sphere that holds out the promise of a quantum jump in bilateral trade relations. In fact, even as regards ethanol, there are non-technical problems — such as the debate over food security (ethanol is based on sugar) versus reducing dependence on fossil fuel — which may prevent strengthening of links between the two countries in ethanol trade, let alone expanding them. It is against this background that the two-way trade target of $10 billion by 2010 should be seen, especially because it represents a massive 400 per cent jump from the existing level (around $2.4 billion in 2006) in the next three years. Apart from solving the difficult logistics problems given the huge distances involved, another factor affecting efforts to improve bilateral trade ties would be the preferential trade agreement between India and the five Mercosur nations (Brazil, Argentina, Paraguay, Uruguay and Venezuela). Any expansion of trade with other member nations within Mercosur cannot but have some unsettling effect on the Indo-Brazilian trade.

Though an improvement in trade relations would be a big step forward, it is more than likely that India-Brazil cooperation will flower more easily and productively in such areas as international trade diplomacy (at the WTO, for example) and providing leadership, in general, to the developing world at forums such as the United Nations (both are in the running for a place in the Security Council). Seen in this perspective, the India-Brazil-South Africa summit (September 2006) should perhaps be treated as a more important facet of India-Brazil ties than the efforts being currently underway on the trade front. Clearly, while the latter initiative should continue, the broader foreign policy and international trade diplomacy imperatives outweigh considerations of bilateral trade.

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