Aiming to increase bilateral trade from the present level of around $1.5 billion to at least $10 billion by 2030, India and South American nation Colombia will soon finalize terms of reference of Partial Scope Agreement.
Talking to Financial Express Online, a top Indian diplomat at the Indian Embassy in Bogota, Colombia said that achieving the target of $ 10 billion by 2030, may seem a herculean task but should not be difficult. “As Colombia continues to improve its trade and investment climate, Indian companies should surely look at expanding and entering this lucrative market.”
Colombian economy’s growth is set to climb this year on acceleration in exports. The investment should surge on infrastructure and oil sector investments; although the government’s fiscal consolidation efforts could cause domestic demand to decelerate slightly.
However, downside risks stem from uncertainties over the pace of fiscal reforms, challenging external environment, the Venezuelan refugee crisis.
How has India fared in this market?
This year the two countries are celebrating 60 years of diplomatic relations. “The bilateral trade has now stabilized because in the past it fluctuated at around $ 1.5 -2 billion when Indian exports to Colombia in 2015 were $ 1.19 billion dropped to $ 945 million in 2016. Since then have recovered and maintained over $ 1billion,” the diplomat said.
Adding, a number of Indian companies have made serious efforts in accessing this market. All Indian two-wheeler brands have a presence in Colombia including — Bajaj, Hero, TVS and Royal Enfield which race past Suzuki, Yamaha, AKT, KTM, etc., on the Colombian roads.
“Bajaj and TVS three-wheelers can also be sighted in small towns- this mainly on account of Colombian law which restricts such vehicles to ferry passengers in areas with a population of less than 55,000. This rule has no scientific basis. Mahindra and Mahindra pickup trucks are popular in “Eje Cafétero” – Coffee producing region- due to their robustness. And, its crossovers and SUVs are attracting attention due to design and price advantage. This is significant as they face stiff competition from the US, European, Japanese, Korean, Chinese automakers.”
India also has a growing share in pharmaceuticals, agrochemicals, textiles – fabrics, accessories to make the Colombia textile sector more attractive and competitive. The Indian IT companies have earned a good name and employ thousands of Colombians in Bogota and Medellin.
According to the diplomat, the new drivers of Indian exports to this market could be e-vehicle, undertake EPCs projects and add financing the incentive to make the bids attractive, biotech, solar energy, the services sector- invest in hospitality and tourism.
What about the Hydrocarbons sector?
Colombia is a member of the OECD since June last year. The current regional oil production situation remains uncertain and demands that India scale up existing hydrocarbon investments in Colombia. And the Indian investors will find a welcoming environment.