The Ministry of External Affairs has initiated a move to establish a direct sea and air link between India and the Latin American region, as Indian corporates line up significant investments in the oil, mining, IT and pharmaceutical sectors there.
The Ministry has taken up with the Ministries of Shipping and Civil Aviation for establishment of these links.
“Air India will be starting a direct twice-a-week service between India and Panama by next year. This will open up access for Indians to the entire Latin American region,” Dammu Ravi, Joint Secretary (Latin America and Caribbean), Ministry of External Affairs, said.
direct sea link
Absence of a direct sea link is also muting growth of trade between the two regions, as it currently takes about 45 days for a ship from India to reach that part of the world.
“Ships currently go through different transhipment ports to reach that region. If there is a direct sea lane, the time could be reduced to 30 days. We are also talking with Indian shipping companies on this,” he said on the sidelines of a CII event here. Latin America currently accounts for a share of about 10 per cent of India’s total oil imports, but this is set to increase as new refineries are increasingly going in for crude from this region.
The new refineries, such as those of Reliance and Essar, are designed to crack dirtier crude, as available in Latin America.
But, hauling crude from there takes about 40 days, while crude from West Asia can be shipped to India in about three to four days.
“A direct sea route to Latin America could bring down shipping costs substantially,” a shipping industry official said
India is targeting at doubling the trade between India and the region from the current level of $30 billion in the next five years.
The 33 countries in this region have recently come together to form a single trade entity, looking for increased bi-lateral trade and technological cooperation with India.
Indian companies have invested about $16 billion in that region, which would increase sharply in the coming years with companies such as ONGC, Reliance and National Mineral Development Corporation planning new investments in the oil, mining, IT and pharma sectors there.
Ravi said India was also working towards making visa norms more flexible.
“We have visa-on-arrival facility for 11 of 33 countries in that region. We are now planning to add some more countries for this facility in the second list,” he said.
India has also initiated negotiations for a Free Trade Agreement with some of the LA countries.
Currently, India only has a preferential trade agreement with two countries, including Chile, in that region,
“We have proposed an FTA with Peru and Mexico to start with,” Ravi said.