Post-COVID, India’s focus in the LAC region is gaining momentum: MEA

By: |
March 6, 2021 6:14 PM

The main challenges for India in Trade in the region are the markets, which are largely protected. Also, there is heavy competition from intra-regional and foreign FTA partners.

There should be warehousing facilities as this will offset the issues related to time taken for Indian goods to reach Central America and the Caribbean.There should be warehousing facilities as this will offset the issues related to time taken for Indian goods to reach Central America and the Caribbean. (Representative image)

In an effort to increase their presence in SICA member countries and the LAC Region, next round of India-SICA talks are expected to take place later this year or early next year.

Responding to a question by Financial Express Online, Ms Gloria Gangte, Joint Secretary, Latin America & Caribbean Division, Ministry of External Affairs (MEA), said, “India seeks to keep up the momentum of engagement with the member nations and hopes to organize the meeting positively by the end of 2021 or early 2022.”

Adding, “The current pandemic of Coronavirus had impacted trade between India & LAC countries but the road ahead looks positive.”

In an interactive E-lecture organized by The Peninsula Foundation (TPF) on “India’s engagement with Latin American and Caribbean countries: Policy and Prospects”, Ms Gangte also talked about the vibrant cultures the two regions share and India’s growing focus in the LAC region is gaining momentum.

What is SICA Grouping?

It is a small group of countries in Central America, which is critical to India as it offers free exchange of trade with other countries like the US as well European nations. The SICA countries are keen to have deeper economic ties and space cooperation.

Members of SICA

There are seven members: Costa Rica, El Salvador, Guatemala, Belize, Honduras, Nicaragua and Panama. And Dominican Republic is an Associate Member.

The last round of talks had taken place in 2015, in Guatemala City, after which due to the non availability of dates of member countries the next round of talks between India-SICA has not taken place.

India has already announced its plans to increase Lines of Credit to the SICA countries to around $ 240 million. According to senior officials, the SICA Grouping has invited India to become an extra regional partner of the Central American Bank for Economic Integration (CABEI). Why? Because not only will it help in bringing further development to the region, it will also help in consolidating India´s presence in the region.

What is India keen to promote in SICA countries?

Five Pillars of Regional Cooperation as well key areas including Pharmaceuticals, Food & Energy Security; Space Cooperation; Aerospace; Agriculture; MSMEs, and capacity building.

Also Read: El Salvador seeks Indian investments in artificial intelligence, security, solar energy and infra projects: Envoy

Both sides are also gradually trying to move towards a Customs Union. And for implementing this, several measures need to be carried out based on the particular priorities of each country.

Also Read: India-SICA talks to take place soon to help promote bilateral trade and investments

As reported by Financial Express Online earlier, Post-COVID, Indian mission in Guatemala was perhaps the only mission in Central America, which had during the global lockdown started engaging with the Indian businesses in various sectors through virtual meetings and exhibitions.

Also Read: Post-COVID: Indian Companies look towards three Central American nations for business opportunities

Minimum population and Maximum business share, says Indian envoy to Guatemala, El Salvador and Honduras, BS Mubarak

In an earlier interaction he had told Financial Express Online, “With sustained efforts, Indian companies can increase their market share in these small countries. These will provide adequate returns on investments.

Recommendations made by a top diplomat

To sort out trade-related issues and issues related to tariff and non-tariff barriers, there should be a Preferential Trade Agreements with individual countries and or creating Joint Economic Commissions.

The time of transit for goods that are being exported from India to Central American countries can be brought down by engaging all stakeholders — shipping and logistic companies.

There should be warehousing facilities as this will offset the issues related to time taken for Indian goods to reach Central America and the Caribbean.

India & LAC

The LAC Region has huge market potential with the GDP in terms of PPP which was USD 10 trillion and the per capita GDP stood at USD 9,900 compared to India’s USD 2,200.

“Over the last 5 years, there has been a forward push to engage with the LAC countries as India sees the region as vital to its trade and national interests. The trade between India and the LAC region from 2015-2016 increased from USD 30 billion to USD 35 billion in 2019-2020,” said Ms Gloria Gangte.

According to her the LAC region is important for Indian exports and the trade between India & LAC region hit its peak at USD 39.7 billion in 2019-2020 which indicates the undoubted potential and gives an assurance that India – LAC trade will increase in the years to come.

Trade Agreements

The main challenges for India in Trade in the region are the markets, which are largely protected. Also, there is heavy competition from intra-regional and foreign FTA partners.

India has signed Preferential Trade agreements (PTA) with various LAC countries and is looking to build deeper relations and gradually expand them into Free Trade Agreements (FTA).

“India is also working with the various trade blocs like MERCOSUR, Pacific Alliance and others to develop synergy in trade. Indian investment in the LAC region is US$ 20 million, with more than 134 Indian origin companies and 216 subsidiaries in operation. The Indian companies encourage local employment which aids in capacity building and better collaboration,” she said.

According to her there are several sectors which can be tapped by the Indian businesses, like the Ship building sector. On Space, she mentioned that the recent launch of the Amazonia satellite stood testament to the Space cooperation between India and the LAC countries.

At the programme which was chaired by Air Marshal M Matheswaran, Chairman & President, The Peninsula Foundation and moderated by Dr Sunod Jacob, Senior Fellow, Ms Gangte highlighted India’s vaccine diplomacy and medical packages worth Rs 17 crore sent to the LAC region.

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