Since sweeping to power in May 2014, Indian prime minister Narendra Modi has made just three trips to Latin America.
He has called on every country in East Asia bar North Korea and visited Russia twice and the US three times but when it comes to South America he has come to Brazil once with both other trips devoted to French Guiana, to oversee a satellite launch.
His itinerary has left many wondering when — and whether — Indian-Latin American trade relations will every truly take off.
Experts say a deeper commercial bond would benefit both sides. “One can only imagine what India can achieve if it emulates China and gains access to Latin American resources,” said Marcus Svedberg, chief economist at emerging market investment manager East Capital. “If Modi is serious about his ‘Make in India’ campaign, and his push to build East Asia-quality infrastructure, he needs to make this bilateral relationship work.”
Shilan Shah, India economist at Capital Economics, said it was easy to see the huge scope for growth. “But to realise this ambition, it will require both sides to really work at the relationship.”
Trade between India and Latin America has grown from less than $2bn a year at the turn of the century, to $46bn in 2014, according to India’s commerce ministry. Experts say that number could rise to $100bn if both sides were to push through preferential and free trade agreements.
India excels in sectors such as IT and services; Latin America in food processing and agriculture. Both want to build export-geared manufacturing sectors: India in order to generate millions of new jobs; Latin America to ease its dependence on low-margin commodity exports.
This is a fraction of Sino-Latin American trade, which hit $289bn in 2014. China has pledged to invest another $250bn in Latin America by 2025, siphoning capital into the region through its development banks.
India’s financial institutions are far less international in scale and ambition and, as Capital Economics’ Shah notes, India’ premier has outlined no plans to change the status quo. “There was a huge hope when Modi came to power, that he would focus on boosting state-to-state trade and deals with the likes of Latin America. That has not happened.”
Look deeper and the deals are there. India is a larger buyer of Venezuelan crude than China; it sources a fifth of its oil from Brazil, Colombia, Mexico and Venezuela.
But too many deals fall by the wayside. Essar Steel was forced to abandon a 2.5bn-tonne steel plant in Trinidad. Last week, Beijing-based Sinosteel Corporation announced plans to construct a $422m steel plant at El Mutún in Bolivia, on the Brazilian border. The announcement came after India’s Jindal Group dropped plans to invest $2.1bn in El Mutún, after years of disputes between Jindal and Bolivian legislators. “The collapse of that deal sums up India’s scattergun approach with Latin America,” said one analyst.