The commercial relationship between Latin America and India has great potential to significantly invigorate the economies of both regions. Although economic cooperation between India and the various nations that make up Latin American is still well-below its potential, the growth in ties between the regions has already resulted in exciting and positive results.
In an exclusive interview, we speak with Mr. Craig Dempsey, Co-Founder, and Managing Director of the Latin American market entry and back-office service provider, Biz Latin Hub. In this interview, we discuss Indian and Latin American commercial relationships, economic synergies and exciting business opportunities for investors.
Why invest in Latin America?
With the huge increase in globalization, international business opportunities are becoming more accessible than ever before. India is an economic superpower and a global leader in a range of sectors, and as such, has a lot to offer emerging global economies, including those of Latin America.
Nowadays, companies are looking across borders as a way to expand their operations; whether they are looking to find new clientele, or looking to access an educated labor pool, foreign investment offers a raft of appealing benefits.
Latin America has come a long way in the past decade, and now the region has various nations experiencing strong economic growth. Additionally, many Latin American countries have democratically elected governments who are extremely ‘pro-investment’; encouraging foreign participation in the market place. Take Argentina and Colombia for example, countries that allow 100% foreign ownership and the ability for companies to be incorporated with only one shareholder, either a natural or a legal person.
If you take a glance at the different Latin American nations, you will see that there are several factors driving the current increase in economic growth in the region. Such factors include economic stimulation due to investment, an increasing skilled labor force, a growing middle-class with greater purchasing power amongst others.
What commercial opportunities are available for Indian entrepreneurs in Latin America?
There are a wealth of business opportunities for Indian companies in Latin America, and in a variety of sectors, such as pharmaceutical, automotive and the IT and software sectors. The growing middle class in the majority of Latin America creates an ideal environment for Indian entrepreneurs who want to invest in the region. With a fast-growing population under the age of 35, e-commerce is becoming a key part of everyday life in Latin America, and with Indian being renowned for their prowess in this sector, the opportunities become obvious. However, the IT sector is at an incipient stage in the region, which means a challenge but also an opportunity for foreign Indian investors. Indian companies have every opportunity to encourage and stimulate the use of e-commerce in the region in addition to bringing new products and services to meet the market demand.
How do you see the current economic relationship between India and Latin America?
When talking about India and Latin America, one can see that the commercial relationship in terms of structure is quite similar to the growing relationship between the Latin nations and China. India is a leader in the exportation of industrial products such as vehicles, medicines, machines, chemicals and plastics, while Latin America exports fuels, natural resources and agricultural products. Additionally, India has been showing improvements in its industrial structure and business model, competing directly with China and other Asian economic powers in certain sectors, notably the automotive sector.
Nearly 3,000 Chilean products and 450 products from MERCOSUR’s nations have achieved a preferential tariff treatment in the Indian market. There are trade agreements in discussion between India and two Latin American nations (Peru and Colombia). In fact, this month, India and Peru will hold the next round of formal discussions regarding the Peru-India Free Trade Agreement – a large and promising economic initiative between the two great nations.
Is it a good time for Indian companies to look towards Latin America as a viable investment destination?
Yes, now is definitely a great time for Indian companies to invest in Latin America. Latin America is a great place for doing business, especially for Indian companies with valuable skills, services, products and expertise. The growing number of opportunities in Latin America are luring in foreign companies looking to expand their operations, and Indian sits in a favorable position to take advantage of these market opportunities. Additionally, as Latin America continues opening up to foreign investment, Indian will find that doing business in the region becomes cheaper, less complicated and subsequently more profitable.
It is necessary to take into account that the markets of India and Latin America are in several ways complementary. It will be important that India and Latin America explore new ways of strengthening cooperation and collaboration to ensure the continued economic success of regions. The commercial and economic potential for both regions is enormous, exciting and clear, and both regions look forward to see how this develops over the coming years.
