India is showing renewed interest in the Latin American region with two key heads of state – President Ram Nath Kovind and Vice President M Venkaiah Naidu – expected to visit a few countries in the region next month. Both the visits are being seen as significant though belated as these come at the end of the Modi government’s tenure. These visits are efforts to step up political engagement and increase trade and investment in the region.
Speaking to the Financial Express Online on condition of anonymity, a senior officer said that, “The Vice President Venkaiah Naidu is expected to visit Paraguay and Central American nation Costa Rica early March. Dates are in the process of being confirmed.”
While there have been several visits in the region at the ministerial level in recent times, these two visits will be back to back covering countries like Bolivia, Chile, Paraguay and Costa Rica.
According the officer quoted above, during the visit to the region, the Vice President will be accompanied by a high level business and official delegation, and the talks with leaders of both will focus on increasing trade and investments in various sectors as well as addressing Diaspora in these countries.
The Central American nation Costa Rica tops the Happy Planet Index, and is known to use a quarter of the resources it has. It is also the only country in the world which has no Army.
The Costa Rican President, Carlos Alvarado Quesada, had recently said at Davos 2019: “Seventy years ago, Costa Rica did away with the army. Eight per cent of our GDP is invested in education because we don’t have to spend on the army. So our strength is human talent, human well-being.”
A senior officer of Costa Rica in an earlier interaction had said that “With the global competitive scenario changing, and the emerging economies, including India are increasingly contributing to the expansion of trade and investment flows, opening new opportunities for countries worldwide. There are lot of opportunities to work together with India in the renewable energy sector, tourism.”
According to reports, Costa Rica generates more than 99% of its electricity from renewable sources. The country over the last few years has been exploring new opportunities with India in an effort to deepen and strengthen relations.
“Both countries are in the process of negotiating an agreement to promote investment and bilateral business relations. There have been discussions between the Ministry of foreign trade of Costa Rica and the Ministry of Commerce and the industry of India in an effort for an early conclusion of an Agreement for the Reciprocal Promotion and Protection of Investments and Framework Agreement to Promote Economic Cooperation between both countries,” said the officer quoted above.
There is a great potential for strategic alliances between Costa Rica and India in the area of business processing services, agro products, knowledge processing operations, digital animation and software development sectors, among others. There are also opportunities in mining sector for minerals and Gold and Zinc Mines.
Sources said that India can focus on expanding business relations with Costa Rica. Made-in-India motorcycle is already exported to Costa Rica and Indian company Havells Sylvania has a factory in San Jose.
In fact, the credit for making Costa Rica as the America Headquarters for Havells Sylvania goes to company’s former director of America, Kapil Gulati in 2010. After quitting the company Gulati has made Costa Rica his home and has been organising regular Yoga sessions and Indian classical dance sessions, in addition to Indian cuisine cooking classes at his restaurant chain ‘Taj Mahal’.
In Paraguay, when Naidu meets with Paraguayan President Abdo Benítez, the focus of talks will be on expediting the negotiations for the expansion of the India-MERCOSUR Preferential Trade Agreement (PTA), which is in line with Prime Minister Narendra Modi’s strategy of expanding India’s trade basket.
As has been reported by The Financial Express Online earlier, the countries that are part of the India-MERCOSUR (Brazil, Argentina, Paraguay and Uruguay) PTA have been in discussions to increase the tariff lines in order to boost the trade volumes. The expansion of the agreement will enhance trade relations between the countries involved, and the trade volume target is set at $30 billion in 2030. However, due to differences amongst the members of the groupings, the expansion of the India-MERCOSUR PTA is getting delayed.
In fact the Minister of Commerce and Industry Suresh Prabhu has been keen about expanding trade ties with the countries in the region has reached out personally to some of the leaders of the group requesting them to fast track the expansion talks.
Both sides have already exchanged lists of items where each side is seeking greater market — India has exchanged a wish list of 4,836 tariff lines mentioning 8-digit HS codes with MERCOSUR in July 2016 and the MERCOSUR grouping has exchanged their wish list of 3,358 tariff lines.
During talks with the President of landlocked Paraguay, the focus will be on energy and food security needs of our region, enhanced connectivity and trade and investment facilitation that builds on the complementarities in of both sides.
Today, India imports Soybean oil and its fractions, Sunflower-seed, safflower or cotton-seed oil and Fixed vegetable fats and oils from Paraguay which is nearly $- 253 million in 2017. There are lots of opportunities in Paraguay market for Indian Companies in Agriculture, fertilizers, agriculture equipment, Pharmaceutical drugs (Generic medicine), and Indian Textile industries. The South American country is a good producer of Cotton.
In traditionally isolated and under populated Paraguay, food, beverages, and tobacco sub-sector has been the core manufacturing activity, followed by textiles, clothing, leather, and shoes comprised the third largest manufacturing sub sector. These industries are traditional, grounded in the nation’s abundance of inputs like cotton fibers, cattle hides, and tannin extract. The sub sector accounted for about 10 percent of all manufacturing.