Sunday, May 11, 2014

Latin American interest in Modi and Gujarat

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, Didi and Modi. The ambassadors were doubly happy with Modi since he received them twice for meetings; first in Gandhi Nagar in 2012 and the second time in Delhi in 2013. Modi had shown keen interest in educating himself about the region, listened attentively and asked the ambassadors for their suggestions to strengthen relations. So the Latin American Ambassadors expect more attention to their region if Modi comes to power. 

The Latin Americans recall that it was the the NDA government in 1998-2004 which had taken a number of unprecedented initiatives to engage Latin America, which did not receive adequate Indian attention in the past. It was when Yashwant Sinha was the External Affairs Minister of India that IBSA was formed, PTA with Mercosur and agreements with the regional groups of Andean Community and Central America were signed. While the UPA government had certainly expanded the relations with Latin America, there were two specific problems. Natwar Singh, who was External Affairs Minister in the period 2004-5 refused to make any visit to the region on the plea that the journey was too strenuous for his age. The UPA II made the mistake of making E. Ahmed as the Minister of State in charge of Latin America in 2012-14. This was simply a disaster. He had shown the least interest in Latin America since Gulf consumed most of his attention. He also took the excuse that the journey to Latin America was too tedious for him. The Latin American ambassadors hope that the next government will give the charge of the region to a young and energetic Minister of State.
Modi has got attention of the Latin American media too. A senior and serious Brazilian journalist Patricia Campos de Mello (author of a book on India) has come to cover this election. This is the first time that a Latin American reporter is covering the Indian elections. Some Latin American commentators have made positive mention about Modi and the "economically vibrant" state of Gujarat.

Gujarat has become the most important state of India in Indo-Latin American business, accounting for over sixty percent of of India's trade with Latin America. In 2013, the Jamnagar refineries of Reliance and Essar imported 22 billion dollars of Latin American crude oil and exported 3.3 billion dollars of diesel to Brazil. This is significant considering the fact that the total Indo-Latin American trade in 2013 was 41 billion dollars, with imports of 28 billion and exports of 13 billions. The crude oil came from Venezuela, Mexico, Brazil, Colombia and Ecuador. 
Jamnagar's imports of Latin American crude is likely to increase in the future, given India's growing need for imports of crude oil. At the same time, the Latin American oil exporters are keen to supply more to India since their exports to US, their traditional main market, is reducing imports thanks to the growing self sufficiency after the fracking revolution in production of shale oil and gas. 
Gujarati businessman Adani is a well known figure in Argentine and Brazilian agribusiness circles. Adanis import edible oil ( sunflower and soya oils) from Argentina and Brazil. Edible oil is the third largest import of India from Latin America, amounting to a billion dollars in 2013. This is going to increase in the future, given the growing imports of edible oil with the increasing population and consumption. Besides edible oil, the Adanis are also importing coal from Colombia. 
Gustavo Grobocopatel, President of Los Grobo business group of Argentina 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. He is an Argentine of East European origin and has no family connection to either Gujarat or India. Grobocopatel, known as the King of Soya in Argentina, cultivates 270,000 hectares of land in Argentina, Brazil, Uruguay, Paraguay and Bolivia and is interested in export of edible oil and pulses to India as well as forming joint ventures with Indian companies in agribusiness.

Latin American distributors of agrochemicals are familiar with the exquisite embroideries of Kutch in Gujarat, gifted to them proudly by the Shroff brothers ( Jai and Vikram) of UPL, during their visits to the region. The Shroffs are of Kutchi origin. UPL is one of the largest investors in Latin America with agrochemical manufacturing and seeds business in Brazil, Argentina and Colombia with annual turnover of more than 500 million dollars. 
Chemicals and pharmaceuticals are the largest segment of India's exports to Latin America. Gujarat accounts for a sizable share of these exports, besides in the exports of engineering items and other products to Latin America.
Even if Modi does not become Prime Minister, Gujarat and its entrepreneurs will continue to lead and grow India's business with Latin America which has the potential to contribute to India's energy and food security besides offering significant scope for trade and investment.