Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu,interacted with diplomats of India-Latin America and Caribbean Strategic (LAC) Economic Cooperation in New Delhi yesterday.
In his keynote address Suresh Prabhu stressed on the need for a multi-pronged strategy to enhance our bilateral trade, both in merchandise and services.
He said that establishing value chain linkages will help to boost trade relations between LAC-India.
Patterns of trade have changed dramatically over the past few decades, and business activities at different stages of value addition are now located in different countries, based on where they are most efficiently produced.
Any strategy for enhancing bilateral trade between LAC-India will therefore critically hinge on the scope for value chain integrations in various manufacturing and services segments.
The Minister said that there exists substantial scope for further cooperation in a multitude of sectors, including agriculture, health, energy and information technology.
India, as a fast growing developing economy is experiencing burgeoning food and energy needs, and therefore, deeper ties with partners in the LAC region could prove to be mutually beneficial.
Several countries in the LAC region are agriculture powerhouses with large exportable surpluses. In fact, the region is often referred as another global breadbasket. The Global Harvest Initiative estimates that if the region maintains a Total Factor Productivity growth rate of 2.67 percent per year, food demand within the region can be met and exceeded by 2030, enabling it to vastly increase its contributions to global agricultural markets.
The Commerce Minister said that Indian companies could form joint venture projects for cultivation of lentils, oil-seeds and food grains, which are crucial import items for India, providing win-win opportunities for our regions. Indian companies could also invest in in-situ storage to reduce produce-wastage. India could also share best practices and conduct joint research in sectors such as dairy farming, seeds and pulses.
Suresh Prabhu informed that owing to its competitive advantage in the sector, pharmaceutical products have also emerged as one of India’s main exports to LAC, accounting for nearly 3.3 percent of the region’s imports.
Some Indian pharma companies have also set up manufacturing units in the region. Besides supplying to the local markets, these units also export to the US and other countries outside the region.
Such mutually beneficial arrangements increase revenues for Indian firms, help develop cost-competitive healthcare services in the LAC region, and also lead to export of low-cost generic drugs from the region to other geographies.
The Commerce Minister said with the strength and capability in the Information Technology sector, Indian IT firms are also establishing business partnerships in LAC countries.
The region has a huge pool of multi-lingual, cost-effective professionals which Indian companies are leveraging for a near-shore business model.
Under this model, Indian companies use the units in the region for providing services to their North American clients for 12 hours from the same time zone, and the remaining 12 hours from India. Indian companies can work towards leveraging the opportunities arising from the growth in demand for IT products and services within the region.
Commerce Secretary, Dr. Anup Wadhawan, said that LAC is one of the major economic partners for India and trade has witnessed remarkable growth in recent years he said there are tremendous opportunities for development of growth of services sector in the region.
The Commerce Secretary also emphasised on reducing the cost of doing business by removing unnecessary obstructions and relying on digital innovations.
The LAC region comprises of 43 countries and the most important economic and trading partners of India are Brazil, Argentina, Peru, Chile, Colombia, Ecuador, Guatemala, Venezuela, Panama and Cuba.
The bilateral trade during 2017-18 was USD 29.33 billion, with exports at USD 8.61 billion and imports at USD 20.72 billion. Bilateral trade between India-LAC was USD 38.48 billion (2014-15), USD 25.22 billion (2015-16), USD 24.52 billion (2016-17). The large variation was due to petroleum crude prices.