02 Sep From Peripheral to Pivotal: Strengthening India-South America Relations
This article covers “Daily Current Affairs” and topic details of the India-Latin America Relations.
Syllabus mapping:
GS-2: International Relationship- India- South America.
For Prelims:
What are the key agreements and groupings between India and South American countries?
For Mains:
How did the relationship between India and South America evolve, and significance of South America to India and vice versa? What are the measure areas of cooperation, impediments, and ways forward to strengthen the relations among the countries?
Why in the News?
Indian Minister of State for Agriculture and Farmers Welfare Ramnath Thakur held a high-level bilateral meeting in New Delhi with Chile’s Agriculture Minister Esteban Valenzuela and his delegation. The meeting focused on strengthening agricultural cooperation between India and Chile.
External Affairs Minister Dr. S. Jaishankar co-chaired the 9th India-Brazil Joint Commission meeting with Brazilian Foreign Minister Mauro Vieira in New Delhi. The meeting addressed several key areas of bilateral cooperation and global issues:
India and South America relations:
Octavio Paz, the esteemed Mexican Nobel Laureate and former Ambassador to India in the 1960s, once remarked, “India did not enter me through my mind but through my senses.” This profound observation underscores the sensory allure that both India and Latin America have for each other.
Evolution of India-South America relationship:
Historical Context and Divergence:
Historical Background: When India became a nation-state in 1947, Latin American countries had been independent for over a century. Latin American societies were primarily shaped by European colonization, with African influences in some areas and a relatively minor indigenous presence. In contrast, post-independence India was a South Asian society influenced by British colonial education and cultural integration.
Historical Divergence: Latin American nations were oriented towards Europe and the U.S., while India adopted a policy of non-alignment. This divergence created a polite but noticeable distance between the two regions, despite their mutual fascination with each other’s cultures.
Initial Relations: Diplomatic relations between India and Latin America began shortly after India’s independence, driven by shared colonial experiences and an absence of direct disputes. Early interactions highlighted common interests but had limited impact.
Current Status:
Current Diplomatic Framework: India hosts twenty Latin American and Caribbean embassies and maintains fourteen in the region. India participates in the G20 with Brazil, Mexico, and Argentina, engages with the Community of Latin American States (CELAC), and is involved in various sub-regional forums.
Geopolitical Focus: Despite India’s growing global influence in the 21st century, Latin America remains on the periphery of its foreign policy. The geographic distance is often cited as a barrier, but this has not impeded China’s robust trade relationship with Latin America, which is six times larger than India’s.
Travel and Exchange: Both regions view each other as intriguing but have yet to achieve significant levels of travel and exchange.
Key Drivers of the India-South America Relationship:
1. Trade and Economic Relations
Export and Import Partnerships: India is a major importer of crude oil from Latin America, particularly from Venezuela and Brazil. Conversely, Latin American countries import a range of Indian products such as pharmaceuticals, textiles, and vehicles. For instance, the Brazilian company Surya Brasil imports raw henna from India and exports manufactured henna products globally.
Investment Opportunities: Indian companies like Tata and Mahindra have invested in Latin America. Tata Motors has a manufacturing facility in Argentina, and Mahindra & Mahindra has invested in the agricultural sector in Brazil.
2. Agriculture and Food Security
Agricultural Cooperation: The Indian government and Latin American countries have collaborated on agricultural technology transfers. For example, India’s experience with high-yielding variety seeds and cultivation techniques has been shared with countries like Argentina and Brazil to enhance crop production.
Food Security: India and Latin American countries, such as Colombia, have worked together on projects to improve food security through better agricultural practices and technology exchange.
3. Technology and Innovation
IT and Digital Services: Indian IT companies like Tata Consultancy Services (TCS) and Infosys have established operations in Latin America. TCS has a significant presence in countries like Brazil and Argentina, providing IT services to local and international clients.
Innovation Hubs: Indian companies and Latin American governments have set up innovation centers. For instance, the Brazilian government has partnered with Indian tech firms to create technology parks in São Paulo.
4. Energy and Natural Resources
Energy Cooperation: Indian companies have invested in energy projects in Latin America. For example, ONGC Videsh Limited, the overseas arm of the Oil and Natural Gas Corporation, has invested in oil exploration projects in Venezuela.
Resource Management: The Indian company Vedanta Resources has been involved in mining operations in Peru, focusing on the extraction of copper and zinc.
5. Pharmaceuticals and Healthcare
Pharmaceutical Trade: India’s pharmaceutical companies, such as Cipla and Sun Pharma, supply generic medicines to Latin American markets. Cipla’s medications help reduce healthcare costs in countries like Brazil and Argentina.
Healthcare Collaboration: Indian pharma companies have partnered with Latin American countries for the local manufacturing of generic drugs. For instance, Indian pharmaceutical giant, Dr. Reddy’s Laboratories, has established joint ventures in Mexico for manufacturing and distributing medicines.
6. Cultural Exchange and Education
Cultural Diplomacy: Bollywood’s reach into Latin America is exemplified by Mexican actress Bárbara Mori starring in the film Kites and Brazilian actresses appearing in Indian films.
Educational Exchanges: The Indian government provides scholarships to Latin American students. For example, the Indian Council for Cultural Relations (ICCR) offers scholarships to students from Latin American countries for higher education in India.
7. Infrastructure and Development
Infrastructure Projects: Indian companies have engaged in infrastructure development in Latin America. For instance, L&T Construction, an Indian multinational, has been involved in various infrastructure projects in Brazil, including road construction and urban development.
Development Assistance: India has provided concessional loans and grants for development projects in Latin America. The Indian government has supported projects related to renewable energy and rural development in countries like Guyana.
8. Strategic and Political Cooperation
Diplomatic Engagement: India and Latin American countries collaborate in global forums. Both India and Brazil are active members of BRICS and IBSA, working together on various international issues.
Strategic Partnerships: India and Brazil have worked together on initiatives such as advocating for the reform of the UN Security Council and promoting a multipolar world order.
9. Tourism and Travel
Tourism Promotion: Efforts to boost tourism include promotional events and travel packages targeting tourists from Latin America to India and vice versa. The India Tourism Office in Buenos Aires promotes travel and cultural exchange between India and Argentina.
Travel Agreements: India and several Latin American countries, such as Chile and Brazil, have signed agreements to ease visa requirements and facilitate travel for business and tourism purposes.
10. Sustainable Development and Environmental Cooperation
Climate Action: India and Latin American countries are collaborating on climate change initiatives. For example, India and Brazil have worked together on the development of renewable energy projects, including solar and wind energy, as part of their commitment to the Paris Agreement.
Sustainable Practices: Collaboration on sustainable agricultural practices, such as No-Till farming techniques from Latin America being applied in India to improve soil health and productivity.
Challenges and Obstacles in India-South America Relations
1. Complex Political and Economic Landscape:
Diverse Countries: India must navigate relationships with over twenty Latin American countries, each with its own political and economic context.
Latin American Integration: Compared to regions like ASEAN or the European Union, Latin America has less political and economic cohesion, complicating bilateral engagements.
2. Political Instability and Ideological Shifts:
Political Fluctuations: Political changes and varying ideological currents in both regions have impacted efforts to build stable and enduring partnerships.
Historical Examples: The India-Brazil-South Africa (IBSA) forum, once promising, has seen reduced activity and diminished significance in recent years.
3. Economic Disparities:
Economic Growth: India’s economy continues to grow at over 7% annually, while Latin America’s growth has been sluggish, with an IMF forecast of 1.1% in 2017 and 2% in 2018, and a medium-term growth of 2.6%.
Impact on Trade: Lower growth rates in Latin America affect trade dynamics and may lead to increased efforts to attract Indian investment and improve economic incentives.
Trade Statistics: In 2015-16, Latin America accounted for less than 3% of India’s exports and just over 5% of its imports. The composition of trade is vulnerable to global economic trends.
Decline in Imports: India’s hydrocarbon imports from Latin America fell from $24.5 billion in 2013-14 to around $10 billion in 2015-16.
4. High Tariffs and Trade Barriers:
Tariff Disparities: India’s average tariff on Latin American agricultural goods is 65%, compared to China’s 12.5%. Latin American tariffs on Indian goods are also higher than OECD averages.
5. Connectivity Challenges:
Transport Costs: High transport costs due to lack of direct shipping services and infrastructure issues hinder trade. Indian companies face challenges in accessing Latin American markets effectively.
Historical Attempts: Past efforts to establish direct shipping connections have failed due to economic unfeasibility, and no recent institutional initiatives have addressed these issues.
6. Limited Institutional and Financial Engagement:
Institutional Presence: India lacks participation in key Latin American financial institutions like the Inter-American Development Bank (IDB), limiting its involvement in regional projects.
Banking Connections: There is a minimal institutional banking presence in Latin America, with only a single non-retail branch of the State Bank of India in São Paulo and limited lines of credit.
7. Uneven Investment Footprint:
Indian Investments: India has made significant investments in Latin American sectors such as hydrocarbons, pharma, and automotive industries, estimated at around $20 billion.
Latin American Presence: Latin American business presence in India is relatively small, with obstacles including regulatory hurdles and a challenging business environment.
8. Sector-Specific Challenges:
Failed Projects: High-profile projects such as the Bolivian Mutun iron ore venture and others have faced setbacks due to investment issues and market volatility.
IT Sector Success: Indian IT companies have succeeded in Latin America through the ‘near-shoring’ model, leveraging local resources and time zone advantages.
9. Cultural and Linguistic Barriers:
Language Issues: The lack of fluency in Spanish and Portuguese among Indian companies and professionals is a significant barrier.
Cultural Familiarity: There is limited understanding of Latin American culture and business practices in India, affecting effective engagement and partnership.
10. Competitive Pressures
Global Competition: India face competition from other global players, such as China, which may affect their bilateral cooperation and trade dynamics.
The Way Forward: Enhancing India-South America Relations
Strategic Vision and Commitment: The disparity between the potential and actual state of India-Latin America relations is stark, especially when compared to engagements with China or South Korea. Both regions must develop a clear, comprehensive strategy to bridge this gap and enhance mutual understanding beyond transient diplomatic engagements.
Strengthening Bilateral Frameworks:
Institutionalization: Focus on articulating a strategic plan that includes revisiting the India-CELAC joint statement of 2012, emphasizing political, economic, and technological collaborations.
Regular Dialogue: Ensure regular, high-level meetings and follow-through on commitments to strengthen institutional memory and relationship continuity.
Enhancing Political and Economic Engagement:
Increased Focus: Latin America needs to be given higher priority in Indian diplomacy, akin to India’s approach to Southeast Asia and Africa.
Economic Integration: Support political initiatives with concrete economic and social interactions, including investment protection agreements and removal of regulatory barriers.
Leveraging Synergies:
Complementary Strengths: Utilize synergies between India’s strengths in software, space technology, and biotechnology with Latin America’s expertise in agriculture, renewable energy, and social engineering.
Collaborative Opportunities: Focus on areas where both regions can benefit from each other’s capabilities, fostering mutual growth.
Expanding Trade and Investment Agreements:
Trade Agreements: Intensify efforts under the Focus Latin America & Caribbean (FOCUS LAC) program, and negotiate free or preferential trade agreements with key Latin American countries.
Overcoming Resistance: Address local resistance and balance of payments concerns in both regions to facilitate smoother trade and investment flows.
Understanding China’s Approach:
China’s Influence: Recognize China’s model of engagement in Latin America, which has been effective due to its economic prowess and predictable policies.
Incremental Progress: While India cannot match China’s scale, it should focus on incremental improvements and strategic positioning.
Improving Connectivity and Market Access:
Transport and Logistics: Address the high cost and logistical challenges of shipping between India and Latin America.
Infrastructure Investment: Consider investments in infrastructure, including direct shipping routes and warehousing facilities.
Enhancing Cultural and Academic Exchanges:
Cultural Diplomacy: Strengthen cultural interactions to build a more authentic appreciation of each other’s societies. Expand academic and cultural exchange programs.
Technical Scholarships: Promote and utilize Indian technical scholarships more effectively to build closer academic ties.
Engaging with Regional Blocs:
Sub-Regional Integration: Integrate India’s approach with Latin American regional blocs like the Pacific Alliance and Mercosur to streamline engagement and negotiation processes.
Strategic Sector Cooperation:
Defense and Space: Enhance cooperation in strategic sectors such as defense, space technology, and anti-terrorism efforts.
Addressing Challenges: Learn from past setbacks and ensure that future ventures are better managed and more strategically aligned.
Promoting Soft Power and Civilizational Strengths:
Cultural Promotion: Build on India’s soft power strengths, such as yoga and classical arts, to improve its image and influence in Latin America.
Academic and Cultural Engagement: Increase focus on academic and cultural exchanges to strengthen bilateral ties.
Government Sensitivity and Coordination:
Synchronizing Efforts: Ensure that bilateral exchanges are coordinated to handle disruptions like political upheavals or market distortions.
Communicative Coordination: Maintain open communication channels to align strategies and policies between Indian and Latin American governments.
Conclusion
India’s international role has evolved significantly in this century, shifting from Non-Alignment to a more pragmatic and strategic approach. Despite a lack of historical baggage with Latin America, over the past two decades, India and Latin America have both transformed significantly, moving toward stable growth and prosperity. This evolution has fostered a more positive perception of each other, revealing valuable complementarities and synergies. The enhanced understanding between the regions has opened doors for deeper economic, political, and cultural ties, promising a dynamic and mutually beneficial future.
Download plutus ias current affairs eng med 2nd Sep 2024
PRELIMS QUESTION:
Q. Consider the following organizations/groups:
1. BRICS
2. BASIC
3. G-20
4. G-4
5. IBSA
6. I2U2
7. ISA
India and Brazil are members of how many of the organizations/groups given above?
A. Only four
B. Only five
C. Only six
D. All seven
ANSWER: C
MAINS QUESTION:
What role do strategic partnerships and regional organizations play in enhancing the relationship between India and South America, and how are these interactions influencing global geopolitical dynamics?
(250 words 15 marks)
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