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12 May 2014, Gateway House

Gujarat-Latin America: friends & benefits

The burgeoning trade between the state of Gujarat and Latin America has ensured that Narendra Modi’s campaign is closely followed in Latin America. The new government in India must build on this engagement, which will help address India’s energy, food and investment needs

Former Distinguished Fellow, India-Latin America

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The Latin American ambassadors in Delhi are following the 2014 elections more avidly than ever in the past. There is a reason for their unusual interest this time. They have been visiting different states of India and seeking meetings with chief ministers to promote relations with their region. Only two chief ministers had agreed to meet them, Mamata Banerjee of West Bengal and Narendra Modi of Gujarat.

It is Modi’s campaign which is receiving attention in Latin America. For the first time, Brazil has sent a senior journalist Patricia Campos de Mello (author of  the book “India, from misery to a potency”  on LatAm-India relations) to cover this election. Other Latin American commentators are also interested, and have made positive mention about Modi and the “economically vibrant” state of Gujarat.

The familiarity with Gujarat has a history. Modi has twice in the past received Latin American envoys and businessmen – first in Gandhinagar in July 2012 and again a year later in Delhi.   Modi had shown keen interest in educating himself about the region, listened attentively and asked the ambassadors for their suggestions to strengthen relations with India. So the Latin American Ambassadors expect more attention to their region if Modi comes to power.

They have reason to be confident.

Gujarat is the focus of India-Latin American business, accounting for over 60% of India’s trade with the region. It comprises mostly oil, chemicals and pharmaceuticals.

In 2013, the Jamnagar refineries of Reliance and Essar imported $22 billion of Latin American crude oil (Venezuela, Mexico, Brazil, Colombia and Ecuador) and exported $3.3 billion in diesel to Brazil. This is a significant proportion of the total $41 billion of Indo-Latin American bilateral trade in 2013 (imports of $28 billion, exports of $13 billion).  Jamnagar’s imports of Latin American crude is likely to increase, given India’s pressing energy needs. This is good news for Latin America which is seeing exports to its traditional main market of the U.S. slipping thanks to U.S. self sufficiency in shale oil and gas.

Gujarati businessman Gautam Adani is a well known figure in Argentine and Brazilian agribusiness circles, from which he imports edible oil (sunflower and soya oils) – the third largest import of India from Latin America, at $1 billion in 2013. Like crude oil, this will increase given India’s increasing consumption. Adanis also import coal from Colombia.

Gustavo Grobocopatel, president of $1 billion Los Grobo business group of Argentina which grows and exports soya says with a mischievous smile, “I am a distant relative of Sardar Patel and I will vote for Narendra Modi, if I am allowed to vote.” This is Grobocopatel’s joke these days when Indian businessmen ask him curiously about the “patel” in his name. Of course there is no connection. But it is a happy coincidence – Grobocopatel, known as the King of Soya in Argentina, cultivates 270,000 hectares  of land in Argentina, Brazil, Uruguay, Paraguay and Bolivia and apart from the export of edible oil and pulses to India, is keen for joint ventures with Indian agribusiness companies.

The Latinos also appreciate the culture of Gujarat, and distributors of agrochemicals are familiar with the exquisite embroideries of Kutch in Gujarat – gifted to them generously by the Shroff brothers ( Jai and Vikram) of Uniphos (UPL), themselves of Kutchi origin. UPL is one of the largest Indian investors in Latin America, with agrochemical manufacturing and seeds business in Brazil, Argentina and Colombia and annual revenues of over $ 500 million from Latin America alone.

India must expand the engagement with Latin America beyond Gujarat. The previous BJP-led NDA coalition of 1998-2004 took unprecedented initiatives to engage with Latin America. IBSA (India-Brazil-South Africa) became a reality when Yashwant Sinha was the External Affairs Minister of India, as did the Preferential Trade Agreement with Mercosur and agreements signed with the regional groups of Andean Community and Central America, which have progressed well.

The UPA government also expanded India’s engagement with Latin America, but its leaders balked at the geographical distance. Foreign minister Natwar Singh in 2004-5 refused to visit the region saying the journey was too strenuous at his age (he was 75 years old at the time). E. Ahmed as Minister of State, who had charge of the Latin American region from 2012-14, was too focused on the Gulf, and had little interest in Latin America.

One of the initiatives for consideration by the new government after these elections could be to join the International Community of Portuguese-speaking countries (CPLP) which brings together seven countries from three continents. India could leverage the Goa connection with its Portuguese language and culture as well as the Goans settled in the countries where portuguese is spoken.

This time around, the Latin American ambassadors hope, the next government will give the charge of the region to young and energetic envoys. Latin America has the potential to contribute to India’s energy and food security, and offers significant scope for trade and investment for Indian business in return. The next government in Delhi must nurture this growing relationship – as Gujarat surely will.

Ambassador Viswanathan is Distinguished Fellow, Latin America Studies, Gateway House. He is the former Indian Ambassador to Argentina, Uruguay, Paraguay and Venezuela, and Consul General in Sao Paulo.

This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

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