INDIA LATIN AMERICA RELATIONS
Published on 28 Jan 2025
The relationship between Latin America and India has evolved from a historically limited engagement to a modern era of enhanced cooperation, driven by growing trade, energy security, and technological collaboration. This transition holds significant potential for mutual growth and development in both regions, especially in the context of economic prospects and the pursuit of green energy solutions
Historical Ties Between India and Latin America
✔ Early Recognition: India established relations with Latin American countries, with Mexico being the first to recognize India's independence in 1947.
✔ First Embassy: India swiftly recognized Fidel Castro's government in Cuba in 1959, setting up an embassy in Havana.
✔ Non-Aligned Movement (NAM): Many Latin American and Caribbean nations joined the NAM, a movement India actively supported. India backed LAC countries in the face of U.S. interventions in the United Nations and other international forums.
✔ Historical Momentum: Despite these early interactions, India's relations with Latin America did not gain significant traction throughout most of its post-independence history.
Areas of Cooperation
✔ Economy
● Bilateral Trade: Latin America is now India's fifth-largest trade partner in 2022-23, following the US, China, the UAE, and Saudi Arabia.
o Example: After Russia's 2022 invasion of Ukraine, India's sunflower oil imports from Ukraine plunged by 71% leading to imports from Argentina and Brazil.
● Agriculture for Food Security: Latin America aids India's food security with oilseeds and pulses.
o Example: India imports approximately $2 billion worth of soy and sunflower oil from South America, reducing reliance on Indonesian and Malaysian palm oil, which is considered less healthy.
● Energy Security: Latin America supplies 15% of India's crude oil.
o Example: Nations like Venezuela, Argentina, Brazil, and Mexico offer vast oil reserves.
● Mineral Resources: Latin America provides gold and potential lithium sources.
o Example: The region offers potential sources of lithium for electric vehicles from the "Lithium Triangle" of Chile, Bolivia, and Argentina, along with copper and precious metals from Chile and Peru, and wood from Ecuador.
● Pharma Sector: India exports generic medicines to Latin America, making healthcare affordable.
● IT/ITES Sector: India offers IT services to Latin America, employing 35,000+ locals.
● Automobile Sector: Latin America is a leading destination for India's vehicle exports, particularly Mexico and Colombia.
o Example: Hero, an Indian motorcycle company, has invested in Colombia's production unit.
✔ Political
● Global Ambitions: Latin America is pivotal for India's global ambitions.
o Example: Brazil is a member of G4 supporting membership expansion in organizations like the UNSC and NSG.
● Collaborative Platforms: India collaborates with Brazil in platforms like BRICS and IBSA, providing alternative forums for developing countries and reducing their dependence on Western-controlled institutions.
● Strategic partnership: Growing partnerships with Latin American countries.
o Example: India’s External Affairs Minister (EAM) S Jaishankar has visited four Latin American and Caribbean countries since September 2019, and is visiting four more in April 2023.
● India-Pacific Alliance: The India-Pacific Alliance, consisting of Mexico, Colombia, Peru, and Chile, is a significant regional grouping in Latin America. It has the potential to serve as a crucial link between India and the dynamic Indo-Pacific region.
Challenges in India-Latin America Relations
✔ Political
● Lack of Cohesion: Latin America lacks the cohesion seen in ASEAN and the EU, leading to competitive relations.
o Example: Historically, political and economic rivalries have existed between major countries like Brazil and Argentina.
● Bilateral Transactions: India conducts business bilaterally and engages in occasional regional dialogue.
o Example: India-Brazil Bilateral Investment Treaty and the Comprehensive Economic Cooperation Agreement with Chile, demonstrate the preference for bilateral engagements.
● Impact of Fluctuating Ideological Currents: Shifting political ideologies in Latin American countries can influence diplomatic relations.
o Example: Changes in leadership and government ideologies in countries like Venezuela and Bolivia have affected their relations with India.
✔ Economic
● Economic Barriers: Protectionist measures, including tariffs and non-tariff barriers, could increase costs for businesses and limit market access.
● China's Dominance: India's presence in Latin America is dwarfed by China's immense influence in the region.
o Example: Chinese loans and investments in Venezuela's energy sector have raised concerns about growing Chinese influence.
● Political Instability: Political instability and economic uncertainties in some Latin American countries can deter Indian business investments.
o Example: Economic and political crises in countries like Venezuela have made investors cautious about engaging in the region.
✔ Social
● Linguistic Unfamiliarity: Language barriers exist between Spanish/Portuguese in Latin America and Hindi/English in India.
● Lack of Diaspora: Unlike other international partners, Latin America lacks a substantial Indian diaspora.
o Example: Countries like the United States or the United Kingdom have larger Indian diasporas that foster cultural and economic ties.
● Lower Stakes: India's stakes are generally lower in Latin America compared to other regions.
o Example: India's economic and strategic interests in Latin America are often overshadowed by its priorities in other parts of the world.
● Institutional and Diplomatic Issues: Absence of sufficient institutional mechanisms hinders relations.
Way Forward
✔ Free Trade Agreements (FTAs): India should focus on upgrading existing PTAs to FTAs and signing comprehensive trade agreements with countries like Peru, Colombia, and Mexico.
✔ Leveraging Latin America's Resource Potential: New Delhi must explore partnerships in providing essential commodities like lithium and copper for green energy transition
✔ Institutional Framework and Networks: Establishing an effective institutional framework is crucial for fostering India-Latin America relations, along with developing robust people-to-people and business networks.
✔ Promoting Latin American Languages: Encouraging the learning and usage of Latin American languages in India can incentivize Indian professionals to seek job opportunities in these countries and strengthen trade relationships.
✔ Reviving the 'Focus: LAC' Program: The Commerce Ministry should consider reinvigorating its 'Focus: LAC' program, which has proven effective in motivating and assisting Indian exporters in pursuing business prospects within the Latin American region
India and Latin American countries should view challenges such as inequality, infrastructure deficiencies, technology gaps, and competitiveness issues as opportunities for collaborative partnerships that promote growth and development through increased trade and investment.