Date: 08/04/2023

Relevance: GS-2: Bilateral, Regional and Global Groupings and Agreements involving India and affecting India’s interests; India-US relation.

Key Phrases: Latin America-India Relation, Space Cooperation, Techno-economic Cooperation, Technology Transfer, Technological Capabilities, Robust Ecosystem of Innovation, NAM.

Context:

• Over the last few years, India’s outreach to Latin America has increased significantly.
  • External affairs minister S. Jaishankar, who has visited Brazil, Argentina and Paraguay, is to visit Guyana and Colombia later this month.
  • Minister of state for external affairs Meenakshi Lekhi went on a visit to the region and met with senior officials in Cuba, Guatemala, El Salvador and Bolivia.
  • New Delhi has also hosted a number of regional leaders like the foreign ministers of Brazil, Argentina and Mexico for G20.

Key Highlights:

• Latin American countries such as Mexico, Brazil, Panama, and Argentina are seeking cooperation with India in new sectors such as space, science and technology, and defense—this represents a positive dynamic from New Delhi’s viewpoint.
  • However, in quantitative terms, trade between India and Latin America remains modest despite registering growth in recent years.

What’s the history of India- Latin America Relationship?

• In the first decades after India’s Independence, the country’s limited diplomatic and economic reach forced it to prioritize ties with its neighborhood and major Western powers.
  • Its focus on Latin America was limited despite India’s interest in the region.
  • These challenges of limited resources and diplomatic reach were mirrored by Latin America’s sizable domestic challenges.
• However, the end of the Cold War and India’s clout has offered new opportunities.

Why is India now interested in Latin America?

• Trade and Investment
  • 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.
    • Since 2000, trade has shot up by about 25% annually and is near $50 billion.
  • Moreover, the region has emerged as an important market for the Indian pharmaceutical and automobile industries.
• Diversification of Energy Dependencies
  • India’s desire to diversify its energy dependencies has pushed it towards Latin America.
    • Indian energy majors like ONGC are active in Colombia and Bharat Petroleum in Brazil.
  • Renewable energy is a key interest, too, with potential for cooperation in ethanol and green hydrogen.
    • The region is home to vital reserves of materials like copper and lithium, which will be crucial to India’s energy transition plans.

How has the region responded to India’s outreach?

• Latin America has welcomed increased Indian interest and has tried to attract investment.
  • The Panamanian foreign minister pointed out that Latin American nations can connect Indian companies with the wider Americas market.
• The Latin America region has been hit by covid and the Ukraine war.
  • Many of the region’s major economies are struggling with poverty and inequality.
  • Therefore, increased economic engagement with India is a key priority for many of the region’s economies.

How are the 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 in 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 second 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 may yet prove crucial in shaping India-Argentina relations.
    • With Macri’s visit, both sides are exploring ways to step up cooperation in areas such as defense, nuclear energy, and space.
  • In a step forward, the MoU on defense cooperation between Argentina and India could be significant in view of the former’s evolving military cooperation with China.
• Other Countries of Latin America
  • Elsewhere in Latin America, India is looking to expand its economic footprint.
    • Chile is India’s sixth 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.

Way Forward:

• Traditionally, India’s engagement with Latin American countries has been guided by its role in the Non-Aligned Movement (NAM) apart from being facilitated by the ‘Global South’, which still has some resonance in Latin America.
• While India’s trade with Latin America has grown, it pales in comparison to China’s massive $450 billion trade in the region.
  • China is fast emerging as Latin America’s economic and strategic partner, and India must begin expanding its own footprint in the region.
• 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 civilisational practices such as yoga have gained traction in Latin America.
• Indian firms have lagged as firms race to take advantage of Latin America’s sizable mineral resources.
• India will need to step up its economic diplomacy and join regional economic institutions like the Inter-American Development Bank.

Conclusion:

• Overall, the Indian government has shown interest in diversifying India’s engagement in Latin America, and while India’s interest in Latin America is relatively new, the relationship has been on an upward trajectory.

Source: Live-Mint

Mains Question:

Q. “Latin American countries are seeking cooperation with India in new sectors such as space, science and technology, and defense- this represents a positive dynamic from New Delhi’s viewpoint”. Critically analyze the statement. (250 Words).