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Strategic Perspectives

ON THE SIDE-LINES OF G20: INDIA-LAC

Author: Cdr Subhasish Sarangi

Period: Oct - Dec 2018

On the Side-Lines of G20: India-LAC

Commander Subhasish Sarangi@

 

Prime Minister Narendra Modi will attend the G20 Leaders’ Summit at Buenos Aires (Argentina) on 30 November – 01 December 2018. The G20 is an international forum, founded in 1999, to promote global financial stability. Although the proceedings of the Summit have important implications, the sidelines are no less interesting.

The most mentioned, of course, is the meeting planned with Chinese President Xi Jinping although the two leaders have met twice since the Wuhan Summit in April, at the SCO Summit in June at Qingdao (China) and the BRICS Summit in July. However, this occasion will be used by the PM to engage with a region that has largely been at the periphery of India’s foreign policy – the 33 country Latin America and Caribbean (LAC) region. In fact, it is expected that he will combine this trip with visits to a few countries in the region. Despite his hectic foreign schedule, the PM has visited the sub-continent only twice – the visit to Fortaleza, Brazil to attend the 6th BRICS Summit in July 2014 and Mexico in June 2016. He did not attend the 17th Non-Aligned Movement (NAM) Summit held in Venezuela in 2016.

India has shown a preference for international engagements through regional groupings. Given India’s capacity constraints and strength of diplomatic corps (India has embassies in only 14 of the 33 countries)[1] it is prudent to engage nations far away from India’s primary zone of interest through regional groupings. The Forum for India-Pacific Islands Cooperation (FIPIC) and India-Nordic Summit are two are such examples. CELAC (Community of Latin American and Caribbean states) is the bloc of 33 LAC countries formed in 2011. The First Meeting of the India-CELAC Troika Foreign Ministers was held in New Delhi on 07 August 2012. In October 2015, the Minister for External Affairs attended the India-CELAC Quartet Ministerial Meeting with her counterparts from Ecuador, Costa Rica, Dominican Republic and Barbados on the sidelines of the UN General Assembly. She also hosted the India-CARICOM (the Caribbean Community) Foreign Minister’s meeting.

During the 6th BRICS Summit in July 2014, the PM had an opportunity to meet eleven South American leaders at the meeting between BRICS and Union of South American Nations (USAN) hosted by Brazil’s President. On the sidelines of that BRICS Summit, the PM had talks with the Presidents of Guyana, Peru and Suriname[2].  On the sidelines of the UN General Assembly session in October 2015, he met the Presidents of Mexico and Guyana, and the Prime Ministers of St. Lucia and St. Vincent & the Grenadines[3]. During the 10th BRICS Summit at Johannesburg (South Africa) in July this year, the PM met the President of Argentina.

For regions that have not been visited by the PM due to his busy schedule, the Indian presence is sought to be registered by visit of other high dignitaries. Vice President M Venkaiah Naidu visited Guatemala, Panama and Peru in May this year. President Ram Nath Kovind visited Suriname and Cuba in June this year. Meanwhile high level visits from LAC countries have been progressively increasing each year.

The LAC region is vital for India as a source of energy and agricultural commodities, and as a market of over 600 million people for Indian products and services. The region has a high share of the world’s metallic mineral reserves and hydrocarbon reserves. India’s trade with Latin America grew by 24% in 2017 to $36.3 billion. The exports increased by 15% to $12.9 billion and imports by 28 % to $23.4 billion in 2017, from the previous year[4].

In imports, the most important sectors are energy, natural resources and food products. Five LAC countries accounts for around 20% of India’s oil imports. 98% of India’s soy imports are from Latin America, primarily from Argentina. Fresh fruits and vegetables are supplied by Chile, Columbia, Peru and Argentina. In exports, the most important sectors are automobiles and pharmaceuticals. In fact, LAC accounts for 23% of India’s automobile exports. Pharmaceutical exports to the region are more than that of China despite India sourcing its raw materials from China. India has Preferential Trade Agreement with Mercosur (a four nation South American Trade bloc) and Chile. In February 2014, India acquired observer status with the Pacific Alliance.

Interestingly, in India’s Outward Foreign Direct Investment (OFDI) of $930.4 million to the region in 2016-17, $794.1 million was to Cayman Islands[5]. Around 78% of the investments are in agriculture and mining. It is estimated that 50,000 of the local population is employed by the approximately 200 Indian companies operating in Latin America.[6] Indian IT services companies are the major contributors in this employment. Exim Bank has currently 22 operative Lines of Credit (LOCs) amounting $301.2 million covering 6 countries in the LAC region.[7]

The PM’s visit to Mexico was not coincidental. Due to its proximity and economic linkages with USA, and economic reforms, it has emerged as India’s biggest trade partner in the LAC. In 2017, bilateral trade grew by 33% and reached $8.35 billion. This is incidentally larger than India’s trade with most countries in the Indian Ocean Region. Mexico is the largest export market for Indian-made automobiles. Mexico exported crude oil worth about $2.6 billion in 2017, a growth of 69% over 2016 ($1.5 billion). India is now among the top ten trading partners of Mexico.[8]

Understandably, business houses have sensed the opportunities and moved in to engage with the region. Industry bodies have constituted forums for support of Indian business in the region. The Confederation of Indian Industry (CII) organised the 8th India Latin America and the Caribbean Conclave 01-02 October 2018 at Santiago, Chile.

However, this sense of urgency is completely missing in the Indian strategic community since the region is far away from India’s primary zone of concern. India’s primary connect to the sub-continent in the recent past was Brazil. This connection was reinforced with the formation of the BRICS, IBSA and BASIC groupings. The high point was the 2011 WTO Summit in Cancun, Mexico where the countries led the developing-world bloc. However, with Brazil ensnared with economic and political turmoil, the ties loosened and with it, the interest in the region.

India has defence cooperation agreements with Brazil (2003, ratified in 2006), Chile (2007), Columbia (2009), Ecquador (2011) and Peru (2013). Chile represents India’s eastern most maritime engagement with a naval MoU dating back to 2006. Indian Navy and Chilean Navy have taken part in the RIMPAC and Kakadu multilateral naval exercises this year. Chile has shown interest in procuring the Brahmos missile. Navies of Mexico, Chile, Columbia and Peru have participated in RIMPAC 14 along with the Indian Navy. The Indian military has operated in LAC as part of UN Peace Keeping Missions.

Military cooperation with Brazil includes the use of Embraer aircraft for the indigenous AEW project and IBSAMAR naval exercises under the purview of IBSA. The 6th edition of IBSAMAR was conducted in October this year off South Africa. The 5th Joint Defence Committee meeting was held during 27-29 November 2017 in New Delhi.

There have been modest military sales to the region like the supply of Advanced Light Helicopter (ALH) to Ecuador, Suriname and Peru, and three Chetak helicopters to Suriname. However, Ecuador cancelled the contract in 2015 when four of seven helicopters crashed. Military trucks have been sold to Argentina, Belize, Honduras and Uruguay.

India also has agreements for peaceful uses of nuclear energy with Argentina and Brazil. Agreements for cooperation for space have been signed with Brazil, Argentina, Chile and Mexico. Ground stations in Brazil (Alcantara and Cuiaba) have been providing tracking support for Indian satellites on a commercial basis.[9] Indian Space Research Organisation (ISRO) has launched satellites for Argentina and Chile.

Finally, as is the case for most distant regions, India requires the support of the nations as a vote bloc in the UN and other multinational forums. The PM’s visit in end November will be the final push by this government to upgrade India’s salience in the LAC.

 


[1] Indian Missions, GoI Web Directory accessed from http://goidirectory.gov.in/country_wise_view.php?ct=I001 and https://www.mea.gov.in/indian-missions-abroad-new.htm on 05 November 2018.

[2] PM’s meetings with South African President, and South American leaders on the margins of the BRICS Summit, 16 July 2014 accessed from http://www.pmindia.gov.in/en/news_updates/pms-meetings-with-south-african-president-and-south-american-leaders-on-the-margins-of-the-brics-summit/?comment=disable on 30 October 2018.

[3] India’s Little-noticed Caribbean Diplomacy: Every UN Vote Counts, IANS, Business Standard, 05 October 2015.

[4] India looks to boost ties with Latin America, Jayanth Jacob, Hindustan times, 18 June 2018.

[5] Indian Investments in Latin America and Caribbean: Trends and Prospects, Working Paper No. 75, Export-Import Bank of India, March 2018.

[6] LATINDIA: The Future of Cooperation between India and Latin America, Integration and Trade Journal: Volume 21: No. 43: December, 2017

[7] Indian Investments in Latin America and Caribbean: Trends and Prospects, ibid.

[8] Mexico has become a reliable partner for India’s energy security needs, says Indian ambassador to Mexico, Huma Siddiqui, Financial Express, 20 April 2018.

[9] Latin American countries keen on launching satellites through ISRO, Huma Siddiqui, Financial Express, 10 February 2018.

 

@Commander Subhasish Sarangi is a Research scholar at the United Service Institution of India (USI), New Delhi.

(Article uploaded on 14 Nov, 2018) 

Disclaimer: The views expressed are those of the author and do not necessarily represent the views of the organisation that he belongs to or of the USI.

 

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