Why is India reaching out to Latin America?

What is the history there?

In the first decades after India’s independence, the country’s limited diplomatic and economic reach forced it to prioritize relations with its neighborhood and major Western powers. In its first annual report in 1948, the Ministry of External Affairs stated that its attention to Latin America was limited, despite India’s interest in the region. These challenges of limited resources and diplomatic access were mirrored by larger domestic challenges in Latin America. The distance that separates India and Latin America also limited interaction. However, the end of the Cold War and India’s influence offered new opportunities.

Why is India interested in Latin America now?

First, there has been a boom in trade with Latin America. Since 2000, trade has grown by about 25% annually and is close to $50 billion. Industries such as automotive have driven the growth. Second, India’s desire to diversify its energy dependence has pushed it towards Latin America. Indian energy companies like ONGC are active in Colombia and Bharat Petroleum in Brazil. Renewable energy is also a major interest, with potential for collaboration in ethanol and green hydrogen. The region is home to significant deposits of materials such as copper and lithium, which will be vital to India’s energy transition plans.

View Full Image

What high level contacts have taken place?

Minister of State for External Affairs Meenakshi Lekhi visited the region and met senior officials in Cuba, Guatemala, El Salvador and Bolivia. External Affairs Minister S Jaishankar to visit Argentina, Brazil and Paraguay in 2022. New Delhi has also hosted several regional leaders such as the foreign ministers of Brazil, Argentina and Mexico for the G20.

How has the region responded to India’s outreach?

Latin America has welcomed the increase in Indian interest and efforts to attract investment. Panama’s Foreign Minister Mencomo said the Latin American nation can connect Indian companies to the wider US market. The region is in the grip of Covid and Ukraine war. Many of the region’s major economies grapple with poverty and inequality. Thus, increasing economic engagement with India is a key priority for many economies in the region.

What are the challenges?

While India’s trade with Latin America has grown, it pales in comparison to China’s $450 billion trade in the region. While Beijing is also a major lender to the region, India’s parliament recently pulled up the Ministry of External Affairs to pay just 1 crore to Latin America. Indian firms have lagged behind in the race for firms to take advantage of Latin America’s vast mineral resources. India will also need to step up its economic diplomacy and join regional economic institutions such as the Inter-American Development Bank.