- February 10, 2018
- Posted by: nitin
- Category: Feed
Geography has often served as an impediment in getting India closer to Latin America notwithstanding similar political systems, common approaches to global challenges and cultural affinities. Yet as impact of globalisation is felt in both India and Latin America, common grounds are emerging for cooperation between the region and South Asia’s biggest country. One such area is changing weather patterns and its impact on agriculture and its people.
Blessed with vast resources and talent, the LAC region countries are already a very important segment of world economy. In addition, when the global economy is facing recession and turbulence otherwise, LAC can be an important region for global prosperity and stability.
India plans to source more crude from Latin America as it expands its refinery capacity with units configured to process the heavy crude from the region. According to industry sources, importing crude from Latin America will be quite profitable to the refiners because heavy crude is cheaper than the variety exported by West Asia.
As a block, PA is the 8th largest economy in the world, has 38% of Latin America GDP ($2 trillion) and is the 7th largest exporting entity worldwide. According to a senior diplomat from the PA, the objective of the alliance is to allow free flow of goods, services, capital and people as well as promote competitiveness, growth and social inclusion.
As relations between India and Latin America grow steadily a new story is in the making between India and Pacific Alliance (regional non-political integration mechanism) comprising Mexico, Colombia, Peru and Chile. India enjoys an observer status at the annual summit of Pacific Alliance and in the last annual summit held in Chile in July, Delhi was represented by its envoy in that country. India became an Observer member of Pacific Alliance (PA) in 2014.
A key area for collaboration for PA and India could be understanding the impacts of El-Nino and its common approach against this weather pattern. Countries dependent upon agriculture and fishing, particularly those bordering the Pacific Ocean, are the most affected by El-Nino. All PA states have coasts along the Pacific. El Nino is known to influence weather events across the world, including the Indian Monsoon rainfall.
The policies and tax regimes of the PA countries are more stable, transparent and predictable, as well as investor-friendly. Unsurprisingly, the four countries lead the region in the World Bank’s ‘Ease of Doing Business’ survey.
India’s trade with the PA, which accounts for 40% of its trade with Latin America, has been growing rapidly, and has the potential to reach $30 billion in the next four years from $15 billion in 2014. Mexico, Colombia, Peru and Chile are the second, third, fourth and fifth largest destination of India’s exports in Latin America, after Brazil. Mexico and Colombia have become regular source of crude oil, while Chile and Peru are sources of copper and gold imports for India.