(*)By R. Viswanathan - For those who think that Latin America is too far and cost of freight is too high and therefore the region should be less important for India’s trade, here is the eye opener from the 2016-17 (April-March) statistics of the Commerce Ministry of India.
In 2016-17, India exported more to Mexico (3.5 billion dollars) than to neighbors such as Thailand (US$ 3.1bn), Myanmar (1.7bn) and Iran (2.4bn) or traditional trade partners Russia-1.9bn and Canada-2bn. India’s exports to Colombia ( US$ 787m) were more than the exports to some West European countries such as Austria, Ireland or Scandinavian countries. Guatemala had imported (US$ 243m) more from India than some Central Asians and East European countries.
For those who think that it is very difficult for India to compete with the Chinese exports, here is another piece of information: India beat China in export of pharmaceuticals to Latin America. India’s exports were 651 million dollars in comparison to China’s 404 million in 2016.
In fact, in the last five years, India has been exporting more pharma to Latin America than China. What is even more interesting is the fact that India imports bulk of its raw materials from China, converts them into finished formulations and exports them.
India’s trade with Latin America in 2016-17 was 30 billion dollars of which export was 10.4 billion and import 19.6 bn.
Mexico was the largest destination of India’s exports with 3.5 billion. Export to Mexico has increased by 21% from last year.
Latin America was the leading destination of India’s vehicle exports with a share of 23% of India’s global exports. Mexico continued to be the main buyer of Indian cars with US$ 1.6bn accounting for 25% of India’s global exports. Vehicle exports to Mexico have been steadily increasing in the last three years and the increase from last year was an impressive 39%.
The collapse of TransPacific Partnership (TPP) following the withdrawal of US by the Trump administration is good for India. The TPP had extra clauses for patent protection going beyond the WTO standards and this would have affected India’s generic medicine exports to Latin America.
India’s exports could be doubled to US$ 20 billion in the next five years, if the exporters target Latin America more seriously and systematically.
(*) R. Viswanathan, Distinguished Fellow, Latin America Studies, Gateway House, Indian Council on Global Relations