India: The Relatively Quiet, but Growing Presence of a New Asian Powerhouse in the Western Hemisphere, Particularly BrazilBy: Research Fellow Alex Sánchez
It shouldn’t be a surprise that India is extending a widening presence in the Western Hemisphere. With Washington focused on Iraq and its “War on Terror” in other parts of the world, Latin America and the Caribbean have become candidates for meaningful political and economic relationships with a number of emerging global powers, like India.
Latin America and the Caribbean are zones of interest to the world’s powerhouses, which means that India will have to push its way by other interested parties, like the European Union, Russia and China, aside from the U.S. in order to establish a serious presence on the continent. So far, it has made good progress towards this goal, but much is left to be done. What is clear is that Brazil will be the centerpiece of New Delhi’s geopolitical aspirations in the Western Hemisphere, due to common visions and or grandiose schemes like nuclear energy cooperation, shared interest in ethanol, and a mutual desire to be awarded a permanent seat on the UN Security Council. Trade agreements, high-level diplomatic visits and growing investment projects signal New Delhi’s increasingly bulking presence on the continent, and exemplify the fact that India is here to stay.
When it comes to Latin America and the Caribbean, New Delhi’s most important relationship and main country of interest, is Brazil. This is not surprising, as both of these huge nations share common interests and their economic profiles almost look like mirror images of one another. Among the numerous similarities between Brazil and India are that both nations have emerged to become the gentle giants of their respective regions, which has prompted policymakers in both capitals to begin to have global aspirations. The two countries see themselves as the representatives of the developing countries in Latin America and Asia respectively, and out of this still tentative setting they have quietly embarked on what essentially could be seen as a launching of competitive campaigns (if the expansion of the UN Security Council is very limited) to obtain a permanent seat on the UN Security Council. In addition, both countries have a nuclear history, and today continue to tease with the idea of becoming major nuclear powers. India, of course, already has a small nuclear arsenal and a military edge due to its longtime dispute with Pakistan. Lastly, both Brazil and India have rapidly growing economies, in part due to their fast burgeoning populations.
On July 23rd, Indian Business Insight reported that Brazil and South Africa, both members of the Nuclear Suppliers’ Group, had agreed to sign a nuclear civilian power agreement with India In July, Foreign Minister Pranab Mukherjee hosted a day-long talk which was attended by his Brazilian counterpart, Celso Amorim, and South Africa’s Nkosazana Dlamini-Zuma. “The meeting of the foreign ministers is also a prelude to a trilateral summit in South Africa in October,” an official from Indian Prime Minister Manmohan Singh’s office told Agence France Presse. The three nations also created the India-Brazil-South Africa Dialogue Forum (IBSA) in September 2006, when their respective leaders met in Brasilia and urged the rich nations to yield somewhat on overheated trade talks. The leaders are calling for the UN Security Council to be expanded and add more permanent member seats for Africa and Latin America, as well as another for Asia. A June 26th article in the Financial Express highlights the convergence of trade interests between Brasilia and New Delhi: “Some immediate examples are sugar, soy and wood […] Brazil is a very strategic partner that today shares a lot of strategic and political goals with India, does not have territorial conflicts over land or sea and finds itself outside, like India, to the dominant political power structures in the world sharing more common ground with India than with these structures. Brazil’s prowess in sugar and Ethanol is already known. What is yet unknown is Brazilian potential to be a major supplier of wood and wood products to India and the rest of the world.” A June 3rd article entitled “Why Brazil Matters to India,” carried in Indo-Asian News Service, points out that “it is India’s search for alternative energy resources [that] can make Brazil [the] world leader in biofuels like ethanol – a crucial lynchpin of its quest for energy security.”
Moving from the domestic to the international scene, India and Brazil have evolved as “major voice[s] of moderation” regarding world politics with their two-trillion dollar economies transforming their strategic ties across diverse areas. No wonder that India’s Ambassador to Brazil, Hardeep Singh Puri, was brought to say that “if Brazil and India can take a position together on an important global issue, no one can ignore it.” Brazilian president Luiz Inácio Lula da Silva visited India for three days in early June, demonstrating the growing ties between the countries.
Among the numerous examples of different interests and projects closely tying the two growing powerhouses, is the relationship between OVL, India’s dominant oil company, and Petrobras, Brazil’s state-owned energy giant. The two companies are collaborating in oil exploration, and in addition, the Chennai-based Paramount Airways has collaborative ties with Embraer, the leading Brazilian manufacturer of civilian aircraft, and plans to add another 51 Embraer planes to its existing fleet of five. Furthermore, India and Brazil have signed an Audio-Visual Co-production Agreement.
India and Brazil have staked out a somewhat ambitious bilateral trade target of US $10 billion by 2010. However, it is not only Brazil that India is out to befriend in the hemisphere. New Delhi is returning to historical and ethnological links, as well as aggressively using its newly-born economic dynamism and its available foreign investment capacity to attract new friends, even some of which are not necessarily to Washington’s liking.
Guyana seems to be India’s main interest in the Caribbean region, due, of course to Indian Guyanese making up the majority of the small South American nation’s population. A somewhat comparable condition exists in Trinidad, where large numbers of descendants of Indian immigrants can also be found. An August 17th report by the Caribbean Media Corporation quotes the president of Guyana, Bharrat Jagdeo, praising the Indian government for its contributions towards his country’s growth. “I acknowledge with appreciation the development assistance which Guyana has received from the government of India over the years. This valued assistance has been in various sectors and served to enhance national capacity to promote development.” The statement was made as part of remarks made at the celebration of India’s 60th independence anniversary from the U.K. Also attending the celebration was India’s High Commissioner, Avinash Gupta, who said that “the seed of our relationship, which was sown by the first batch of Indian indentured laborers in 1837, has grown today into a big fruit-bearing tree and today’s generations in both countries are enjoying its fruits.” Other reports indicate India’s interest in assisting Guyana with its developmental thrust through the provision of funding from the Export Import Bank of India (EXIM). In addition, India has been providing medical treatment to poor Guyanese children.
Cuba and India have extended a renewable energy cooperation agreement to 2009. Vilas Muttemwar, India’s renewable energy minister, said that the agreement will help consolidate and integrate Cuba’s strategies for hydroelectric, wind, thermal and photovoltaic solar power generation. “Cuba can count on all our support,” Muttemwar said, adding that India, the world’s fourth largest nation in wind-power electricity generation, would also offer study grants to Cubans under its Indian Technical Cooperation Program. Cuba is the only Latin American nation to have a renewable energy pact with India, which was signed in 1998.
India is a nation that is increasingly emerging in the U.S.’ line of interest, due to the nature of its economy, its geographic location which allows it to bridge eastern and western Asia, and its geopolitical advantage with proximity to Central Asia, Pakistan and China. Meanwhile, given that there is no sign that Washington-Havana relations will improve anytime soon, it would be of interest to know what Washington policymakers think about the potential New Delhi-Havana relationship, which is likely to broaden and deepen in the near future. This makes Havana ever more unassailable to U.S. efforts to isolate the Castro Regime.
Central America and Mexico
Guatemalan foreign minister, Gert Rosenthal, traveled to India from August 25th to the 31st. During his six-day visit, he held talks with the sub-continent’s minister of state for external affairs, Anand Sharma. According to press accounts, the two officials discussed deepening the dialogue and vows of cooperation between India and the Central American Regional Group, known as Sica. Sharma visited Guatemala in June 2006; on this occasion, he announced a line of credit of ten million dollars to Guatemala, and an increase in the number of annual ITEC scholarships from 7 to 15 per year. India’s exports to Guatemala totaled US$73 million in 2006, while imports were only three million. But New Delhi would like to upgrade the pace of trade. For example, India has set up an Information Technology Training Centre in Guatemala run by Tata Consulting Services, India’s largest software firm. In addition, the Reliance group is reportedly exploring the possibility of constructing a refinery in Guatemala, according to a recent report by the Indian publication, The Statesman.
In May, India and Mexico signed a Memorandum of Understanding to set up a bilateral high level group (HLG) to explore, among other issues, the possibility of a preferential trade agreement (PTA) to improve bilateral trade between the two countries. The Statesman has reported that high-level ministerial authorities have been involved in the development of bilateral trade arrangements, with both countries keen to achieve the trade target of US$3 billion. Additionally, Tata Consultancy Services, has announced plans to hire 5,000 personnel in Mexico over the next five years to serve its clients in the U.S.
A January 14th article in the Financial Express evaluated the workings of the Canada-India Business Council (C-IBC) which had been set up in 1982. Canada had imposed a freeze on strategic aspects of trade after India’s 1998 series of nuclear tests, but relations have improved since, especially after a draft nuclear agreement was signed between the two countries in September 2005. India’s trade with Canada is currently around $3 billion. The article goes on to point out existing aspects between India and Canada that have facilitated relations, like their mutual membership in the Commonwealth and the predominance of the English language in India. The fact that India possesses major mineral deposits, for which Canada has the expertise and technology to effectively exploit, is another issue for concideration. At the same time, Canada’s automotive sector “is suffering,” while India can provide inexpensive Trinidad labor for the inductry. An example of the potential that could come from close Indo-Canadian ties occurred in January of this year, when Ontario Premier Dalton McGuinty visited India with a 100-member trade mission.
“The bilateral trade between India and Peru has shown a quantum growth from $82 million in 2001 to $190 million in 2005 and we need to build up an integrated approach in our investments and partnership,” observed Victor Munoz, the charge d’ affairs of the Peruvian embassy in India. Total exports from Peru to its clients touched US$17 billion and imports accounted for $12.5 billion in 2005. Of this figure, mining constitutes more than half of Peru’s exports. Munoz continued, “Peru is a good investment destination for India in these areas because the Free Trade Agreement (FTA) between India and the US provides a platform for Indian investors to export to the U.S.” Peru-India Chambers of Commerce Vice President Marco Hurtado observed that on August 15 of this year, Peruvian President Alan García Pérez met with a group of Indian businessmen to discuss the possibility of a US$1.2 billion investment aimed at constructing a petrochemical plant in Peru, according to the Lima daily La República.
Furthermore, on July 16, Asia Pulse issued a report about the statements made by Jorge Heine, the Chilean Ambassador to India. The diplomat argued that Chile is keen on reducing its trade imbalance with India and at the same time boosting the unfavorable trade volume between the two countries, to their mutual interest. Addressing the members of the Chamber of Commerce, Heine gave a comparative figure of the exports between the two countries, pointing out that in 2006 exports from Chile to India stood at US$1.7 billion, tripling its 2006 export figures. Heine also said that 95 per cent of the exports from mineral-rich Chile to India were made up by copper. An article by Business Line also highlights Indo-Chilean relations, mentioning how the preferential Trade Agreement with India (signed in 2006, and covering 300 products on both sides), has been ratified by the Chilean Congress. Pointing out that Chile’s exports to India have grown exponentially from US$230 million in 2003, to US$1.7 billion last year, he said, “We expect Chilean exports to India to exceed the figure of $2 billion in 2007.” Meanwhile, India has moved to the 10th largest Chilean trade partner globally, up from 20th in 2003, and according to Heine, “our exports to India are more than that to Germany, the UK and Spain”
However, there may be some tensions in the future trade patterns involving New Delhi and Santiago. Japan and Chile want India to reduce its steep import tariffs on wines and spirits. While they have not formally raised a direct dispute against India regarding the issue, they have requested the World Trade Organization (WTO) to allow them to participate as a third party in the panel’s proceedings which hopefully will sort out the dispute.
When it comes to South America, the Indian Commerce and Industry Minister, Kamal Nath, has said that “a trilateral arrangement between India, Mercosur and SACU (South Africa Customs Union) is on the way to widen [the] scope of South-South Cooperation.” Following the conclusion of a Preferential Trade Agreement in 2005, India and Mercosur agreed to grant mutual tariff concessions, ranging from 10 per cent to 100 per cent on 450 tariff lines.
What does this signify?
Using a variety of strategies, from historical ties, to traditional trade, to sharing grandiose plans, India is becoming more and more a living presence in the Western Hemisphere. It still has a long way to go, however, before it becomes a household name among Latin Americans, but it certainly is on the right path. India’s relations with Cuba may perhaps annoy Washington, as well as its dealings with close U.S. neighbors (Canada and Mexico), which may also draw some unwanted attention, however, it is the India-Brazil alliance that should be gathering the bulk of Washington’s attention. The global aspirations of both nations continue to rise even higher, with a very bright future seeming to lie ahead.