By Sandeep Wasnik
India and Colombia mark 64 years (January 19th, 1959) of diplomatic relations. Colombia opened its Embassy in New Delhi in March 1972, and India opened its Embassy in Colombia in 1973. Relations between the two countries have grown stronger and more varied over time, spanning all spheres of shared interest, including the political, economic, and cultural ones. The framework for Foreign Office Consultations was developed in 1995. The ninth session of Foreign Office Consultations was held by video conference on May 7th, 2021.
Also, both nations are members of the Non-Aligned Movement (NAM) and the Group of 15 (G-15). Additionally, both nations work closely together in several international forums, such as the World Trade Organization and the United Nations. In recent years, the relationship between India and Colombia has strengthened and diversified. The two countries have signed a number of agreements in various fields, and they have also increased their cooperation in multilateral fora such as the United Nations and the G20.
Before doing exports and imports or investing in any country, it is very important to understand the culture, economic system, political stability, tax regime, and geographical locations of that country. In an earlier article, “Colombia: Inflation and Challenges,” published on September 13, 2023, gives insight on opportunities in terms of trade and investment in Colombia, also inflation challenges, where the Colombian Government made plans to combat with such kind of challenges.
India – Colombia Space Projects
The government of Colombia is committed to developing the nation’s space program. The Colombian Space Commission “CSC” (Comisión Colombiana del Espacio “CCE)” has been set up to supervise the development and execution of the program. The CSC is also in charge of promoting the growth of Colombia’s space industry.
FACSAT-1, Colombia’s first and only nanosatellite, was sent into orbit on November 28th, 2018, by the Polar Satellite Launch Vehicle (PSLV) C43 from the Satish Dhawan Space Centre in Sriharikota, India. FACSAT-1 is now orbiting and giving Colombia remote sensing data thanks to a successful launch.
FACSAT-1’s launch marked an important turning point in Colombia’s space program and showcased the nation’s expanding space capabilities. It also emphasized how closely Colombia and India work together in the space industry. The launch of FACSAT-1 from India was a historic event for both countries. It showcased their developing skills and close cooperation in the space sector. It also emphasized India’s position as a top provider of commercial launch services.
India has emerged as the leading provider of services for commercial launches in recent years. Several nations, including the United States, Canada, and the United Kingdom, have launched satellites using the PSLV, one of the most reliable and economical launch vehicles in the world.
A Memorandum of Understanding (MoU) on cooperation in the area of cyber security was signed by the two nations in 2022. Additionally, both agreed to form a Joint Committee on Science and Technology. India and Colombia are working together on more space initiatives.
Colombia Bilateral Trade Agreements and Bilateral Investment Agreements.
Today, for Indian businesses, Colombia can serve as the gateway into Latin America, with a growing economy, a young and educated population, and a favourable business climate. Colombia has 18 trade agreements in force, with countries and groups of countries including Andean Community (Spanish: Comunidad Andina, CAN), Caribbean Community (CARICOM), Pacific Alliance, MERCOSUR, European Union, EFTA States, Central America’s Northern Triangle and other, while 5 new agreements are being negotiated. as shown in Infographic (Multilateral Agreements, Customs Unions Agreement and Preferential Trade Agreement.
Below infographic is about Free trade agreement between Colombia with Mercosur, Pacific Alliance, Israel, Costa Rica, Republic of Korea, European Union, European Free Trade Association (EFTA), and others into the FORCE. Also, Colombia singed free trade agreement with United Kingdom on May 15, 2019, and Panama on September 20th, 2013, but both are not into the FORCE.
Additionally, Colombia has “Bilateral Investment Treaties” (BITs) with several nations (24 countries), including Switzerland, Peru, Spain, China, India, and the United Kingdom. BITs provide methods for resolving disputes and protect foreign investors from unfavourable treatment. It can aid in lowering investment risk and promoting international investment in Colombia.
The Bilateral Investment Treaty (BIT) between India and Colombia was signed on November 10th, 2009, and it became effective on July 02nd, 2012. The India-Colombia BIT is a significant pact that encourages and protects investment between the two nations. The BIT includes an array of investments, such as, Direct investments, stock purchases, partnership agreements, and 100 percent owned subsidiaries, Investing in a portfolio of bonds, stocks, and other securities, Loans, and other debt financing methods. BIT provides a number of protections for investors like Most-favored-nation treatment, Investors from each country must be treated at least as favorably as investors from any other country.
Colombia – India Bilateral Trade
Colombia-India, trade relationship that has been growing steadily in recent years, India is Colombia’s 7th largest trading partner, while Colombia is India’s 35th largest trading partner in 2022. In 2022, Colombia exports to the india is US$2455.044 million (Incoterms: FOB value). The top exports from Colombia to India include crude oil, gold, coal, mineral fuels, precious stones, led by emeralds, aluminum, zinc, wood (teak), and plastic. The infographic shows the 20-year Colombia exports to India data from 2003 to 2023 (Jan 2023–Jun 2023).
Colombia imports from the india is US$ 1720.238 million (Incoterms: CIF value) in 2022. The top products Colombia imports from India are motorcycles, engineering products, chemicals, cotton, pharmaceuticals, iron & steel products, and other goods. The infographic shows the 20-year Colombia imports from India data from 2003 to 2023 (Jan 2023–Jun 2023).
India and Colombia have signed nearly 24 MoU’s in different sectors till today. The first MoU was signed between India and Colombia in 1970 for a “Trade Agreement” between the Government of the Republic of India and the Government of the Republic of Colombia (validity for 3 years/continuation for successive periods of one year at a time).
When we say that Colombia is the gateway into Latin America, then India should look for Preferential Trade Agreement or Free Trade Agreement with Colombia to increase the bilateral trade. The general rate of VAT for importing products into Colombia is 19 percent, and the range for customs charges is 0 percent to 20 percent. However, depending on the HSN Code, they might be higher. Import duties or VAT’s impacts the Landing Cost, lowering the importation duties make ease of entering the product in country and more competitive as compared to others. In an earlier article, “Colombia: Inflation and Challenges,” explains about investment in the expansion of its existing infrastructure in terms of seaports and airports and as well as in the development of 4G and 5G roads for better connectivity and transportation systems, this will boost the import and export business in Colombia.
Colombia Special Import and Export Programs
Colombia has created special import and export programs, (Spanish: Plan Vallejo) to encourage international trade activities. Through these programs, raw materials, capital goods, and spare parts may be temporarily imported with full or partial customs duties exemption or with the payment of VAT deferred in order to produce goods or provide services for export. This mechanism’s aim is to encourage and promote the export of items “Made in Colombia” to diversify Colombia’s export portfolio.
Plan Vallejo is more advantageous for the importation of raw materials and inputs; this entails the temporary importation, without payment of customs duties, of goods that will be used exclusively and entirely in the production of export goods or of goods that, even though they are not intended for export, will be used entirely by third parties in the production of goods to be exported.
The World Bank estimates that, when adjusted for purchasing power parity (PPP), Colombia’s GDP per capita was last calculated at US$15651.58 in 2022. When adjusted for purchasing power parity, Colombia’s GDP per capita is 88 percent of the global average.
In conclusion, India and Colombia share a commitment to democracy, human rights, and sustainable development, which serves as the foundation of their partnership. Expanding their bilateral collaboration in all areas of shared interest is in the best interests of both nations. In the coming years, the relationship is expected to get stronger. Numerous cultural exchange initiatives between the two nations exist, and Bollywood and Indian culture are becoming more popular in Colombia but need to focus more on Colombian culture and traditions exchange program in India. The two nations complementing economies are driving up demand for goods and services from both sides. Colombia has a robust natural resource industry, while India has a robust manufacturing sector. It can be said that trade between India and Colombia is expanding and has the capacity to do so in the future. The two nations are dedicated to enhancing their bilateral cooperation in all areas of shared interest because they have a number of common interests.
The author is an Advisor of Latin American and Caribbean countries and is also the Director of international trade and foreign investment at Grupo 108.
Disclaimer: Views expressed are personal and do not reflect the official position or policy of the Financial Express Online