Colombia exported USD795 million to India in products like oil and coking coal, wood, metal scrap, aluminum scrap, vinyl chloride polymers and gold.
By Cristhian A Salamanca García
India is an important trade and investment partner for Colombia. Despite COVID-19, in 2020-21, the total trade balance was USD1.731 million. Colombia exported USD795 million to India in products like oil and coking coal, wood, metal scrap, aluminum scrap, vinyl chloride polymers and gold. While India exported to Colombia USD 936 million in products like organic chemicals, pharmaceuticals, cotton, motorcycles in CKD form, machines, plastic materials, aluminum. Over a decade India’s FDI into Colombia has been around USD 1 billion in manufacturing and services of added value. The business environment between both countries boasts of 13 bilateral agreements in many fields have laid the foundation for building a stronger relationship, like: Investment Promotion & Protection, Double Taxation Avoidance Agreement, Information Technology, Hydrocarbons, Business Development, including the latest one of exploration and use of Outer Space for Peaceful Purposes. Yet, there is an opportunity to unlock the untapped potential of two-way trade between Colombia and India.
Nearly more than thirty Indian companies have settled down in Colombia, driven by the benefits offered by the country as an investment platform. Colombia also enjoys a privileged geographical position, located in the northern part of South America, with access to the Pacific and Atlantic oceans, it is a gateway to the southern part of the continent, and is commercially and culturally an influencer to the countries of Central American and the Caribbean, and is part of the Pacific Alliance trade bloc. Colombia offers investors advantages as an exporting platform too, for example to the United States thanks to a Free Trade Agreement (FTA), among other several FTAs that the country has. It is a politically stable country, whose economy always grows, and as said by many businessmen, it is a lucrative market. With a competitive SEZ regime that grants benefits to businesses involved in production or service activities other markets can be served, counting a population around itself of almost 1 billion people.
A constant presence of Colombian companies in India is yet to be a reality. India is generating great opportunities across several different sectors of its economy through FDI (USD 64 billion in 2020). Sectors like food processing, ready-to-eat food, the services sector, airport services, security, water treatment, renewable energy, urban infrastructure, and services (waste treatment), cosmetics, and luxury goods, could be of interest to the Colombian companies. This is a call to the ‘Multilatinas’ and ‘Global Latin’ companies from Colombia to come to India and see what the country has to offer. The growth of products and services in India can be exponential.
Despite the size and differences among both countries, there are business opportunities for both sides, like:
Food and Food Products: India’s growing population and income per capita will create a huge demand for high-quality products: fruit, vegetables, grain, pulses, juices, which Colombian companies produce and with whom Indian companies can invest/partner.
Colombia as a hub for Indian products and manufacturing: localization of the supply chains and nearshoring are two great options to cover the Latin-American market from Colombia under the current scenario, where the prices of the containers are very high, and the constant restrictions due to the covid-19.
ITeS: Colombia has started a race to to establish itself as a technology hub: the Latin American Silicon Valley, and India is a reference point. India’s own tech valleys like Bengaluru and Hyderabad; the NITI Aayog Agency, the Start-up India Initiative are important to look at. As per the RBI, India has 100 unicorns, while Colombia has only two. But with Colombia’s policy called the “Orange Economy”, the scenario is promising and changing rapidly. FDI is welcome.
Media and Entertainment: Colombia’s Film Law, offers tax incentives for foreign production companies of 40% cash rebate on expenses paid in the country on film services and 20% of the amount paid for logistics services.
Doing business in India or in Colombia is not without challenges, some of which may seem insurmountable at first. In our experience at the Colombia-India Chamber of Commerce we always brief both Indians and Colombians on how cultural barriers will always be there, and how flexibility plays a key role along with patience in the bureaucratic processes and regulatory frameworks.
(The author is the Executive Director of the Colombia-India Chamber of Commerce, with 10+ years’ experience working between India and Colombia. He is also an International Speaker on subjects like Intercultural Management, Business, Design, Innovation and India. Views expressed are personal and do not reflect the official position or policy of Financial Express Online.)