Latin America denotes the region south of the United States i.e., Mexico, the Caribbean Islands, and South America. The name is given since the dominant languages spoken in the region are derived from Latin. Around 60% of the population speaks Spanish, and 30% speaks Portuguese. The region occupies almost 13% of the earth’s land surface. The region has a rich and diverse geography and climate. This has given rise to independent units with varying social and cultural characteristics.

India’s relations with Latin America began with diplomatic and political ties established soon after India’s independence in 1947. While India Latin America Relations have a huge potential given the complementary nature of their economies, a lot still remains to be achieved.

History of India-Latin America Relations

India and Latin American nations were both colonies of European powers. India’s ties with certain Latin American nations are longstanding and Mexico was the first Latin American country to recognize India after its independence in 1947.

After achieving independence, both adopted socialist policies, which did little to enhance relations.

• When Fidel Castro ousted the Batista regime in Cuba in 1959, India was one of the first countries to recognize the new government, set up an embassy in Havana, and establish diplomatic relations.
• In 1968, Prime Minister Indira Gandhi visited eight countries in the region.

• Many Latin America and the Caribbean (LAC) countries joined the Non-Aligned Movement (NAM).
• India also supported LAC countries against US interventions in the UN and other multilateral gatherings, but this did not address the deficit in the relationship.

Importance of Latin America to India

Resources

• To meet our growing Energy demand: Given India’s growing demand for energy and its interest in seeking overseas investments, Latin America attracts New Delhi’s interest. Currently, India sources 15% of its crude oil from Latin American countries.
• Important Minerals: Latin America is also very rich in minerals such as copper, lithium, iron ore, gold, and silver. It allows India to increase investments for their extraction as well as for their imports at cheaper rates.

Economic determinants

India’s exports to Latin America increased by 9.6% in 2018-19 (April to March) reaching $13.16 billion from $12 billion in 2017-18.

• Important markets:Given that three G20 economies, i.e. Brazil, Mexico, and Argentina are in Latin America, Indian businesses are keen to tap its expansive market.

• IT collaboration: During the last two decades, India’s trade with Latin American countries has grown substantially and its investments are diversified in sectors such as Information Technology (IT) and manufacturing.
• Export hub: Moreover, the region has emerged as an important market for the Indian pharmaceutical and automobile industries.

Geopolitical determinants

• China’s emergence in the region: Analysts within India’s strategic community are of the view that China is fast emerging as Latin America’s economic and strategic partner and that India must begin expanding its own footprint in the region.
• India’s Soft Power is making a difference:To its advantage, India’s status as a rising power, its economic growth, as well as its soft power in the form of its cultural and civilizational practices such as yoga have gained traction in Latin America.

Latin America is also an important partner in the India-led International Solar Alliance.

Strategic  Interests

• The region is very important for India in order to achieve its global ambitions such as in order to pursue its membership of the UNSC, the NSG and various other negotiations like climate change, terrorism, trade, etc.
• India is cooperating with Brazil at platforms like BRICS, and IBSA which has provided an alternative platform for developing countries and reduces their dependence on existing institutions controlled by the West.

Food security

• Latin America region is five times that of India and only has half as much population.
• India is importing pulses and oil seeds from many African and Southeast Asian countries at very high costs.

Why India should expand ties with Latin American countries?

• Growth prospect: With a collective GDP of more than $6 trillion, and a combined population of more than 600 million, half of which is under the age of thirty, Latin America constitutes a dynamic, growing, and resource-rich part of the world with huge economic prospects for India.
• Food Security: Latin America can also contribute towards food security. The region is five times the size of India and has only half the population. India is currently importing pulses and oilseeds from other countries at high costs.
• Cheaper imports: Latin America is also very rich in minerals such as copper, lithium, iron ore, gold, and silver, and could give India an opportunity to increase investments for their extraction as well as for their import at cheaper rates.

Relations with Latin American countries

Brazil

• India’s relations with Brazil stand out in Latin America as both are widely regarded as ‘rising powers’ in the international system.
• Owing to their association with emerging multilateral groupings such as the BRICS and IBSA, both sides envision greater cooperation in multiple areas.

Mexico

• Indian enterprises see Mexico as a ‘springboard’ to gain better access to the much larger US market.
• Mexico is India’s 2^nd largest trading partner in Latin America.
• Since Mexico opened its oil sector for foreign participation in 2014, New Delhi has viewed it as a viable source of crude oil and associated investments.

Argentina

In times when relations between Argentina and China have grown rapidly, the 2019 visit of Argentine President Mauricio Macri to India proved to be crucial in shaping India-Argentina relations. Through this visit, both sides explored ways to step up cooperation in areas such as defence, nuclear energy, and space.

An MoU on defence cooperation was signed between Argentina and India, which could be significant in view of Argentina’s evolving military cooperation with China.

Other Countries in Latin America

Elsewhere in Latin America, India is looking to expand its economic footprint.

• Chile is India’s 6^th largest trading partner in the region and its advantageous geographical position incentivises New Delhi to explore broader economic cooperation with Santiago.
• India and Peru, meanwhile, are deliberating on a comprehensive free trade agreement for which three rounds of discussions have taken place so far.

Challenges in Cooperation

• India-Latin America cooperation faces challenges such as a lack of guiding policy, trade barriers, and limited market access.
• The region is relegated to the far end of India’s foreign policy, with Latin America at the far end.
• The Inter-American Development Bank suggests that tariff and non-tariff barriers, restricted market access, and inefficiencies along transport and logistics routes impede trade.
• India has relatively few bilateral trade agreements with the region. Expanding economic cooperation depends on Indian companies’ interests, many of which still view the region as distant and difficult to engage.
• The lack of Spanish and Portuguese speakers in Indian companies is a disadvantage for some.
• Indian companies that ventured to Latin America have had mixed experiences, with challenges such as –
  • Uruguay‘s revoked mining licenses for Zamin Resources,
  • Iron ore projects in Bolivia and Sugar ventures in Brazil
  • China’s growing role in expanding regional industries may also impede Indian prospects.

Significance of India-Latin America Relations

1. Pharma exports: India exports a billion dollars worth of generic medicines to Latin America, which has helped these countries reduce the cost of healthcare.
2. FDI: Latin American firms have invested about a billion dollars in India in areas such as soft drinks, multiplexes, theme parks, and auto parts.
3. Software production: Latin American software firms have also established development and delivery centres in India, employing over a thousand Indian software engineers
4. Energy security: Latin America has also emerged as a key contributor to India’s energy security. India now imports 20% of its crude oil from Brazil, Columbia, Mexico and Venezuela.
5. ITES exports: India also constitutes one of the largest suppliers of IT services to Latin America. Over 35,000 Latin Americans are employed in Indian IT companies operating in the region.

Way Forward:

India’s economic activity is crucial for Latin America and the Caribbean, especially due to the recent global economic fallout.

1. India’s External Affairs Minister stated on August 3, 2023, that India and the Latin American and Caribbean Region should aim to double their trade to US$ 100 billion by 2027 for this, the EAM proposed a plan with four pillars –

1. 1. Supply chain diversification,
   2. Resource partnerships,
   3. Sharing of development-related experiences, such as digital capabilities, health solutions, and agricultural practices,
   4. Addressing global challenges.

1. India’s economy is expected to grow by 5.5% in 2023-2024, allowing for continued cross-border investment in value-added sectors like IT services, pharmaceuticals, and manufacturing. Indian IT services companies employ over 100,000 Latin Americans, and 27 Indian companies operate 72 subsidiaries across the region.
2. India should advance common India-LAC interests and encourage greater cooperation by actively engaging with the three Latin American members of the G20 to deepen its engagement.
   • India aims to become a leading power and develop a global footprint, which requires reaching every region.
   • Meanwhile, India can develop a formal LAC policy to engage with Latin America and Caribbean countries.

Conclusion:

India’s trade with Latin America is negligible in comparison to China’s $450 billion trading in that region. Historically, Indian businesses have lagged in LAC. Hence, India will need to step up its economic diplomacy and join regional economic institutions like the Inter-American Development Bank.