By Dr Aprajita Kashyap, Assistant Professor
The visit of the Minister of State for External Affairs from 11 January 2023 will include interaction with high-level dignitaries and business groups in Guatemala and El Salvador which are part of the Northern Triangle countries. It is worthwhile to note that increased foreign assistance and FDI are necessary to build economic opportunity in the Northern Triangle, one of the poorest regions of the Western Hemisphere. Apart from bilateral engagements; it will also provide an opportunity to network with the Central American Integration System (SICA).
Since 1985 it has been a constitutional duty in Guatemala, one of the countries to be visited by the MoS, to promote domestic and foreign investment which became entrenched with its membership in WTO in 1995. Over the past couple of decades, trade policy has been liberalised in the energy and telecommunication sectors and there are even legislations to guarantee national treatment for foreign investors to create a favourable investment climate.According to a former Guatemalan Ambassador to India, this country under the mantra “Guatemala No Se Detiene” (Guatemala does not stop) has generated vital strategies that seek to attract entrepreneurs from all over the world to invest in the region.
The trade relations between India and Guatemala have witnessed an upsurge due to huge potential in the areas of automobiles, auto spare parts, engineering goods, equipment for the sugarcane industry, pharmaceuticals and textiles. The Embassy held theNamaste India Festival with cultural and business (around 30 Indian companies participated) components in November 2019. Since Central America is close to the US, these countries have become good destinations for Indian IT BPOs (including Xerox acquired by HCL with over 700 employees). India, one of the largest importers of palm oil in the world, can procure it from Guatemala, thus diversifying from traditional sources like Malaysia and Indonesia. According to a study conducted by UNCTAD in 2019 has analysed the opportunities derived mainly from the trade of primary and processed products in the agricultural sectors. It significantly mentions cardamom,a spice for which India has a massive fascination, where Guatemala has become the world’s top exporter due to favourable climatic conditions.The India-Guatemala Business Forum formed in November 2019 would be competent to nurture the development of commercial and economic relations between them.
The other Central American country to be covered under Ms Lekhi’s visit is El Salvador. It offers a stable economy despite political upheavals, a qualified workforce and a strategic geographical location for Indian companies seeking to do business. Main exports to El Salvador from India have been pharmaceuticals, automobiles (two and three wheelers), fabrics, organic chemicals, plastic and plastic articles while the imports by India are mainly wood and associated products and iron and steel. It had received doses of India-made vaccine AstraZeneca as part ofvaccine maitri. When India as a member of the International Sugar Organization (ISO)attended the meeting of2017 in San Salvador, it was enthralled by the potential of the sugar sector and this must be capitalised upon. The agricultural sector, an important driver of economic growth, faces chronic underdevelopment of its human capital where the technical assistance through IT companies of India would be critical to creating proficient human resources.
Apart from the bilateral facet, the entire Central American region can be accessed using the platform of SICA whose stated objective is that economic relations need to eventually extend beyond that with the United States and other European nations to Asia. This may become the plank to explore the strengths vis-à-vis the requirements to determine areas of possible cooperation in the sectors of defence, information technology, health and medicines and culture. Following the India-SICA Foreign Ministers’ meeting in 2008, India had announced an enhanced Line of Credit facility and had agreed to share its experience to meet challenges of food security and energy security with SICA member countries. India can offer cooperation and assistance in SMEs, tourism, renewable energy, disaster management apart from the traditional sectors of trade.
The trajectory of cooperation can leap forward if concrete strategies and policies are announced to take advantage of each other’s strengths and to learn the best practices from each other.Moreover, boosting economic ties with India would be possibility due to socio-cultural similarities.Also, from the perspective of South-South cooperation, this visit will also be perceived as a manifestation of ascertaining collective self-reliance, accrual of mutual benefits and attainment of internationally agreed development goals. A continuation of dialogues and efforts at relevant forums on issues of common interest must include diversification (in terms of both countries and products) of trade, the reform of the UNSC, addressing climate change and curbing international terrorism.
Author is Centre for Canadian, US and Latin American Studies, JNU, New Delhi. Email: firstname.lastname@example.org; email@example.com
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