06-January-2025-Special-Article

INDIA’S RELATIONS WITH LATIN AMERICA AND THE CARIBBEAN (LAC)

India’s relations with Latin America and the Caribbean (LAC) are expanding, with increasing trade, diplomatic engagements, and cultural exchanges across all 33 nations in the region. However, challenges remain, such as geographical distance, limited trade agreements, and competition from China, which has a stronger presence in the region.

Historical Background

Rich Historical Ties: India’s connection with Latin America dates back to contributions from Pandurang Khankhoje (agricultural scientist) and M.N. Roy (political activist).

• Rabindranath Tagore’s visit to Argentina in 1924 fostered cultural exchanges.
• Poet-diplomat Abhay K has written books highlighting the cultural richness of the LAC region.

Early Engagements: Prime Ministers Nehru and Indira Gandhi laid the foundation for ties with high-level visits in 1961 and 1968, respectively.

Economic Liberalization: India’s economic reforms in the 1990s paved the way for stronger trade and investment links with the LAC region.

Current Trade Scenario

Trade Growth: India’s trade with LAC reached USD 43.22 billion in 2023, with a target of USD 100 billion by 2028.

• Key Imports: Crude oil, gold, and soybean oil.
• Key Exports: Refined petroleum products, motor vehicles, and pharmaceuticals.

Major Partners: Brazil, Mexico, and Colombia dominate bilateral trade relations.

Strategic Position: The LAC region offers a balanced market compared to highly regulated regions like the US and Europe.

Political and Bilateral Cooperation

Recent Diplomatic Visits:

• External Affairs Minister S. Jaishankar’s 2023 visit to Guyana, Panama, Colombia, and the Dominican Republic was the first by an Indian foreign minister to these countries.
• India’s enhanced focus on G20 members Argentina, Brazil, and Mexico underscores its interest in deeper political ties.

Regional Cooperation:

• Agreements with Latin American trading blocs like Mercosur and Chile highlight growing economic collaboration.
• Brazil’s active role in BRICS, IBSA, and G20 forums strengthens India-LAC political ties.

Importance of Latin America for India

• Economic Opportunities: Rich in resources like copper, lithium, and iron ore, vital for India’s industries. A combined GDP of over USD 6 trillion presents significant export and investment opportunities.
• Energy Security: LAC supplies 30% of India’s crude oil imports from the region, including Venezuela, Mexico, and Brazil.
• Strategic Partnerships: Counterbalance to China’s growing influence in the region.
• Cultural and Educational Exchange: Collaboration in IT and pharmaceuticals has created jobs for over 40,000 professionals.
• Food Security: Vast agricultural resources offer solutions for India’s pulse and oilseed needs.

Key Sectors of Cooperation

Pharmaceuticals:

• India is a global leader in affordable, high-quality medicines.
• Brazil is a key destination for Indian pharmaceutical exports.

Energy:

• Collaboration with Bolivia on lithium extraction to support India’s renewable energy goals.
• Bolivia’s membership in the International Solar Alliance strengthens energy ties.

Agriculture:

• Partnerships in food processing and agricultural research enhance sustainability.

Infrastructure Development:

• India’s development assistance includes a USD 100 million Line of Credit to Bolivia for infrastructure projects.

Challenges in Strengthening Relations

Limited Trade Agreements:

• Existing PTAs with Mercosur and Chile lack the depth of India’s FTAs with other regions.

Regional Mechanisms:

• No comprehensive framework for engaging with sub-regional groups like SICA or CELAC.

Geographical Distance and Barriers:

• High travel costs and visa challenges hinder stronger people-to-people ties.
• Cultural stereotypes on both sides affect mutual understanding.

China’s Dominance:

• China’s established trade ties, investments, and FTAs with key LAC nations overshadow India’s presence.

Economic and Political Instability:

• Inflation, political challenges, and low infrastructure investment in some LAC nations impact trade and cooperation.

Strategies to Strengthen Relations

• Revive Focus:LAC Program: Strengthen market access, institutional mechanisms, and infrastructure for economic collaboration.
• Promote Trade Agreements: Expand FTAs and PTAs with LAC countries, focusing on technology, agriculture, and clean energy.
• Encourage Diplomatic Engagement: High-level visits and participation in regional trade forums to foster collaboration.
• Boost Export Promotion: Financial support for Indian exporters targeting LAC markets. Industry associations to help navigate trade barriers.
• Support Latin America in Global Forums: Advocate for LAC countries on issues like climate change and economic instability.
• Enhance Cultural Exchanges: Strengthen people-to-people and business-to-business connections.
• Improve Service Trade: Address non-tariff barriers and establish mutual recognition agreements for professional qualifications.

Conclusion

India’s ties with Latin America and the Caribbean hold immense potential for mutual growth, driven by trade, resource cooperation, and cultural exchanges. While challenges like geographical barriers and China’s dominance persist, targeted strategies and diplomatic efforts can position India as a significant partner in the region’s development.

Mains Question:

1. “Examine the strategic importance of Latin America and the Caribbean (LAC) region for India in the context of economic opportunities, energy security, and geopolitical competition with China.” (150 WORDS)