By Sandeep Wasnik
In 1948, India and Brazil established diplomatic ties. Since then, the partnership has grown steadily and is now built on a solid basis of shared democratic ideals, consensus on many global issues, and complementary economic profiles. The two countries are key allies who work closely together in bilateral, multilateral, and plurilateral, including platforms such as BRICS, IBSA, G4, G20, BASIC, as well as the United Nations in the wider multilateral context, also both countries are expected to deepen cooperation in emerging areas like renewable energy, biotechnology, and digital technologies.
Together, Brazil and India have a GDP of more than US$8 trillion, making them two of the world’s biggest rising economies. Following decades of strong economic expansion, both nations are now well-positioned to assume a more significant role in the world economy.
The economies of Brazil and India are similar in terms of their economic structure, with a large service sector that contributes more than 60 percent of their respective GDPs. 20 percent of the GDP is made up of the manufacturing sector. While agriculture still makes up over 15 percent of GDP in India, Brazil’s agricultural industry is much smaller, contributing only 5 percent of the country’s GDP.
Brazil – India Bilateral Investment
Brazil -India Investment Cooperation and Facilitation Treaty (ICFT) was signed on January 25, 2020, yet not into force. The Brazil – India ICFT contains 28 articles and provides a framework for cooperation and facilitation of investment between the two countries. According to the Ministry of External Affairs of India, India’s total investment in Brazil is estimated to be more than US$6 billion. However, it is expected that Brazil has invested US$1 billion in India.
Brazilian Foreign Direct Investment (FDI) policies are welcoming and accommodating to foreign investors. In most economic sectors, foreign and domestic investors are given equal treatment. Certain industries, including mass media, telecommunications, and aerospace, have few restrictions on foreign ownership. In recent years, the Brazilian government has taken several steps to attract more FDI, like reducing the bureaucratic burden, offering tax breaks and other incentives, streamlining the investment approval process, and creating a more business-friendly environment for foreign investors.
One of the biggest development banks in the world, the “Banco Nacional do Desenvolvimento” (National Investment Bank – BNDES), supports international investment, as does the Brazilian government. The majority of restrictions on foreign investment have been lifted, especially with regard to the stock market. In April 2022, Brazil established a single government institution, the Office of the Direct Investments Ombudsman, to facilitate interactions between foreign investors and all other Brazilian government agencies.
In Brazil, Indian corporations such as TVS, ONGC Videsh Limited (OVL), NMDC Limited, Glenmark, Zydus Cadila, Sun Pharma, Dr. Reddy’s Laboratories, Sterlite Group, United Phosphorus Limited (UPL), Tata Motors, Infosys, and Wipro are well-represented and have made significant investments.
Brazil – India Cooperation in various sectors
Brazil milk production: The Brazilian white revolution was sparked by an Indian cattle breed. In the 18th century, a `Gir’ cattle pair was gifted to a well-known Brazilian livestock legend and prosperous businessman Celso Garcia Cid by BhavNagar Maharaja. Reddish-white coats and down horns are the characteristics of this breed’s fame, about 80 percent of the country’s milk production came from Gir, which the Brazilian Ministry of Agriculture formally registered in 1989.
Brazil – India Space cooperation: In 2004, India and Brazil signed a framework agreement for the peaceful use of space, which was followed by an agreement between the space agencies regarding inter-institutional cooperation. Since then, data sharing and satellite monitoring of Indian satellites have been conducted jointly by the two nations. In February 2021, the successful launch of Amazonia-1, an Earth observation satellite that was developed, integrated, tested, and operated by Brazil, marked a major milestone in space collaboration between India and Brazil.
Brazil – India Defence & Security Cooperation: In January 2020, A joint statement and action plan for enhancing defence and security cooperation were signed by both the nations. India currently has joint ventures with several Brazilian enterprises, such as SSS Defence and CBC, the second-largest ammunition maker in the world. Recently, the commander of the Brazilian Army, General Tomas Miguel Ribeiro Paiva was to visit India for six days with an official delegation. This was the first time that Commander of the Brazilian Army travelled to India. The visit marks an important milestone in the two countries’ long-standing partnership between two armed forces. There are other sectors where Brazil and India have also signed cooperation agreements.
Brazil – India Bilateral Trade
India-Mercosur Preferential Trade Agreement (PTA): This agreement was signed in 2004 and came into force in 2009. It applies to 450 and 452 tariff reductions ranging from 10 percent to 100 percent. Although the India-Mercosur PTA has had an advantageous impact on bilateral trade, it has a limited scope.
India and Brazil recorded bilateral trade of US$8.2 billion in 2022, with US$6.30 billion exports to India and US$6.30 billion exports to Brazil. India’s bilateral trade balance with Brazil is surplus, while for Brazil it’s a negative trade balance. Brazil’s main imports from India in August 2023 were refined petroleum US$143 million, pesticides US$45 million, nitrogen heterocyclic compounds US$34.4 million, packaged medications US$24.9 million, organo-sulfur compounds US$19.8 million and other, the top exports of Brazil to India were Soybean Oil US$173 million, Crude Petroleum US$136 million, Gold US$65.4 million, Iron Ore US$35.8 million, Turpentine US$6.06 million, and others. Ten (10) years of India’s trade balance with Brazil is shown in the infographic.
Brazil Exports to India was US$6.30 billion during 2022, according to the Ministerio da Industria, comercio Exterior e Services database followed by 2021 – US$4.80 billion, 2020 – US$2.88 billion and US$2.75 billion. Brazil export to the world is US$334.4 in 2022 and exports to India is just 1.88 percent only. The infographic shows the 10-year exports data.
On the other-hand, Brazil Imports from India was US$8.85 billion during 2022, according to the Ministerio da Industria, comercio Exterior e Services database followed by 2021 – US$6.73 billion, 2020 – US$4.17 billion and US$4.54 billion. Brazil imports from the world is US$ 272.70 in 2022 and imports from India is 3.24 percent of total imports from the world. The infographic shows the 10-year imports data.
India’s Prime Minister Narendra Modi and Brazilian President Luiz Inacio Lula da Silva agreed to collaborate in order to expand the India-Mercosur Preferential Trade Agreement during Brazil’s Mercosur Presidency in order to fully realize the economic potential of this partnership at the G20 Summit. Both leaders expressed satisfaction with the growing trade between India and Mercosur. India and Brazil have a robust and growing trade relationship overall. Strengthening and broadening trade relations is a priority for both nations. An extensive Comprehensive Trade Agreement between Brazil and India would be an important milestone in this endeavour.
Conclusion on Brazil – India ties
Brazil and India work jointly in multilateral forums on matters such as trade and development, environmental issues, UN reform, and the expansion of the UN Security Council because both share similar perspectives on issues that impact developing nations. Both nations are members of the G-15, G-20, and BRICS.
At the G20 Summit, Brazilian President Luiz Inacio Lula da Silva has also expressed a desire to strengthen Brazil’s ties with India, expand trade and investment, and promote cooperation on issues such as climate change and sustainable development. India proposed a Global Biofuel Alliance (GBA) to unite nations to develop and open new markets for sustainable biofuels. Brazil is the world’s second-largest producer of biofuels, accounting for 22 percent of its transport energy in 2022. On the other hand, India is also a significant producer of biofuels; both nations may collaborate to create environmentally friendly biofuels that are more effective.
Brazil and India have complementary economies, with Brazil being strong in mining, energy, and India being strong in pharmaceutical industries, IT, engineering, and engineering. It is anticipated that this complementarity will propel investment and trade between the two nations. In 2022, bilateral trade between India and Brazil was US$15.15 billion. I believe that Brazil – India bilateral trade will reach US$20 billion by 2025 and US $30 billion by 2030. In order to increase trade and investment across a wide range of sectors, India and Brazil have to focus on expanding their trade agreements.
The author is an Advisor of ASIA – Latin American and Caribbean countries and is also the Director of international trade and foreign investment at Grupo 108.
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