Trade between India and LatAm are likely to double in in next five years from the current level of $30 billion,with direct shipping,air connectivity,visa on arrival and free trade agreements as some of the steps being taken to boost trade with the region.
“At the rate at which it is growing in about five years,we should be able to double it. If not,it will be $50 billion,” said Dammu Ravi,joint secretary (Latin America and Caribbean) in the MEA.
So far,the Indian companies have so far invested $16 billion in the region,while more companies are exploring opportunities in trade,investment and mining. Today,60 % of the current bilateral trade is in oil,hydrocarbons,minerals and agriculture commodities but it is now moving into niche area like pharma and IT services.
While transportation costs and the lack of familiarity with each other’s markets were previously cited as the big impediments,government is planning to improve connectivity to the region,and a direct flight is expected to be launched next year. “Indian Airlines can perhaps have direct connection to Panama,where we have large Indian community and which is a hub connecting north and south America,” he said .
Underlining the need for direct shipping,he pointed out that presently it takes about 45 days due to transshipments to Europe and Singapore. The government is working on direct shipping,which will not take more than 30 days,as talks are going on with ministries of commerce and shipping.
The joint secretary said the region was aiming at visa waiver and requesting all the countries in the region to relax the visa norms by disposing of visa applications of Indians within a day. He pointed out that Indians holding a US visa don’t need separate visas for all eight central American countries.
“Now in reciprocity we are planning to give them visa on arrival facility. This facility is already available to 11 countries. We will extend it to more countries,” he said.
For the first time,exports to Colombia crossed the billion dollar mark with $1.042bn,at number three for Indian exports after Brazil ($5.043bn) and Mexico ($2.698bn). Peru is the 4th largest destination with $ 742 million and Chile climbed to fifth rank with $ 658 million.
“India is negotiating Free Trade Agreement (FTA) with Peru and Mexico,we know that when Pacific Alliance takes shape,we will have FTA with Pacific Alliance which include all four countries and the entire area will become a very potent trade region for India.”
Talking to FE,Augusto Castellanos,director,Colombia’s commercial office in India,said, ” The two countries are increasingly finding business opportunities with each other and are on track to diversify its business to generate sustainable growth for both countries. The growth in India is due not only to the fact that Indian companies are finding an important market in Colombia,but also because many of them based in Colombia have managed to cover the entire region,because of factors including: Excellent location in the middle of the Americas,providing easy access to North and South,as well as the various free trade agreements that the country and the free zones,with benefits such as income tax of 15 % and non-payment of import tariffs and VAT,plus a double taxation agreement with India that will take effect in the coming months.”
For India-Latin America trade,there is substantial demand from India for commodities and raw materials from Latin America,especially as the former embarks on $1 trillion of infrastructure investment in the next five years or so.