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To meet the challenges of an uncertain global market, India needs to explore more preferential trade agreements (PTA) and economic engagements with Latin American countries (LAC) which hold potential due to the big size of the market and comparatively favourable regulatory conditions, an industry report has proposed.
“Trade negotiations are on the anvil by several LAC economies to promote trade with major economies and emerging markets of the world including India to reduce trade barriers and attract investment. This is an appropriate time when Indian small, medium and micro enterprises can rise up and significantly contribute towards enhancing bilateral trade with LAC,” according to a report titled ‘Doing Business in Latin America and the Caribbean’ brought out by the Engineering Exports Promotion Council.
The report, which aims to spread awareness about the opportunities in Latin America for Indian businesses, was released by Commerce Secretary Rita Teaotia on Tuesday.
“Many Latin American countries present attractive investment opportunities due to their comparatively favourable regulatory conditions. Through the North American Free Trade Agreement and other foreign investment treaties, many countries in the region — like Mexico and Colombia —have attracted significant investment inflows and established clear regulations governing foreign investments,” according to a report.
India and Chile recently agreed to enhance the scope of their bilateral PTA. The country also has a PTA with Mercosur — which includes Brazil, Argentina, Uruguay and Paraguay — but it is limited in scope. Talks are on to enhance the PTA. India is working on a PTA with Peru as well and the Commerce Ministry hopes to finalise a Cabinet note soon on the proposed agreement.
“There exist a number of preferential trade agreements between India and various other countries of this region (LAC). India is desirous of consolidating and expanding such agreements to boost our trade and commerce,” said Teaotia while releasing the report.
India’s increasing focus on building ties with the LAC region has increased two-way trade to $32.59 billion in 2015 from trade from $2 billion 15 years ago. Total trade has, however, experienced a decline of 33.53 per cent in the year 2015 as compared with 2014.
“At present, our exports are less than 2 per cent of Latin America’s total imports. Lack of adequate air and maritime connections also hamper trade. We also need better connectivity to promote tourism,” the report pointed out.
India’s trade with the region includes a range of products from soybean to aircraft to minerals. The region accounts for 20 per cent of India’s total crude oil import.
More than 100 Indian companies have invested over $12 billion in the LAC region across a wide variety of industries, including mining, metals, agriculture, petrochemicals, pharmaceuticals, plastics and manufacturing.
Leading Indian investors in Latin American countries include Tata Consultancy Services, Dr Reddy’s Laboratories, United Phosphorus, Videocon (television), ONGC Videsh, Jindal Steel & Power and Essar Steel.
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