In an effort to provide momentum to India’s growing interest in the region, Minister of State Ministry of External Affairs (MEA) Meenakshi Lekhi will head to El Salvador next week. The talks will focus on Artificial Intelligence, Industry 4.0, water management, and trade and commerce energy and food security among other issues.
According to sources since there is a possibility of high level visits from both sides this too could feature in discussions as well as SICA talks.
Minister Lekhi is already on a four nation tour in the region – Cuba, Guatemala, El Salvador and Bolivia before she returns to India (Jan 13-20, 2023). According to the official announcement by the MEA Jan 17-19, Lekhi will be in San Salvador capital city of El Salvador. Besides calling on the President she will also have meetings with Ministers of Foreign affairs, Culture and Economy.
This is the first higher level visit to El Salvador since 2015 when the then Minister of State Ministry of External Affairs Gen VK Singh visited that country and in 2013 too there was a visit by the then Minister of State for Women Welfare.
“This is a good gesture. The country opened its embassy in New Delhi in 2008. However there is reciprocity and India should consider looking into this,” opined a former diplomat.
Both countries have been working hard on activating the relationship in terms of political and diplomatic ties and also commercially and economically, as well as culturally. Despite the two years of global pandemic of Covid-19, the two sides have managed to deepen their relationship in several sectors and though the market of the Central American nation is not very big yet it has witnessed a boom in its commercial relationship opined the diplomat quoted above.
“Even though maybe for India, the market is not as big as some other countries in the region, it doesn’t mean it is not important and as the numbers show the trade has been growing steadily in firstly in the last three years, especially in 2021 and 2022 almost doubles up in terms of imports from India. So the country is importing a lot of things from India — different products, especially textiles, automobiles, pharmaceuticals — medicines and drugs.”
India is steadily and vastly becoming a very important partner for El Salvador. And in 2022 it was 11th partner of imports for El Salvador as that country is importing more from India than what it does from Germany for example, or Colombia, that is in the neighbourhood. This means the trade is growing very fast and there is a growing interest from the El Salvador market for the Indian products, and especially in textiles, finished products, semi finalized products, and raw materials like dye and cotton and all that kind of things in automobiles, especially to two wheelers and three wheelers, all the parts like tires.
One area that needs to be considered is that pharmaceuticals as El Salvador is not only an importer of medicine, but also a producer. This means that it has its own industry in terms of pharma and it could be a competitor too and it not only produces but is an exporter in its region.
Some facts about Northern Triangle
In 2021 India stood as the number 11th partner in terms of imports for El Salvador. Five years ago India was actually at the 17th position. However as the El Salvador government becomes more politically stable under its president, India is becoming an important partner for trade and this is expected to deepen further. Besides the automobile sector especially auto spares, medicine, drugs as well as medical devices are different sectors where Indian businesses are playing an important role.
In Central America in terms of the region, there is some political turmoil and somehow instant instability. Elections are expected to take place in Guatemala soon during the next elections, Honduras has the same situation. Following Nayib Bukele victory in the presidential elections in 2019, he took over office as the youngest leader in the region and since then there has been a dramatic change in El Salvador.
He is a popular leader of his country and is expected to be in power for one more term or even two,” opined the former diplomat quoted above. Adding, “In that sense, it makes a lot of sense that the government of India has steady and strong ties with the government of El Salvador itself.”
El Salvador, Guatemala and Honduras together form part of the Customs Union of Central America’s Northern Triangle which represents a US$6.2 billion market with a US$134 billion GDP and a 32.1 million customer market. Lekhi has already visited Honduras and in this visit she will also go to Guatemala.
President Nayib Bukele who is considered to be a strong leader by some in the region is keen on building international relationships with countries especially with India. He was supposed to visit New Delhi back in June 2020 but the visit could not take place due to the global pandemic of COVID 19.
El Salvador: A Strategic Partner for Investment
El Salvador is 156 times smaller than India and in Latin America and the Caribbean (LAC) it ranked 15 out of the 40 countries to which India exports.
What does it import from India?
Synthetic dyes, medicines, motorcycles, knitted fabrics and automobiles. Financial Express Online has reported earlier that the Central American nation El Salvador has urged Indian companies to take advantage of the incentives offered by the new government of President Bukele and to invest in various sectors including energy, aeronautics, textiles, tourism and apparel, and light manufacturing and renewable energy.
It is the only country in the region which among other benefits offers full exemption from income tax for an indefinite period of time and it is an export-oriented free-market economy.
El Salvador is a member of the International Solar Alliance, and is seeking collaboration with companies based in India and building relations with government bodies like Chennai based National Institute of Wind Energy.
The two countries could also work together in the aerospace sector, especially MRO which has been steadily evolving.
It is part of the Central American Integration System (SICA) which is a very important grouping which has eight full members: Guatemala, Honduras, Nicaragua, Belize, Costa Rica, Dominican Republic, El Salvador, and Panama.
It has been reported earlier that India has already set up Centres of Excellence in Information Technology in some SICA countries and is now focused on promoting cooperation in five pillars of regional integration, in key areas such as food & energy security, agriculture, capacity building and MSMEs.