In consonance with the recent strategy of the Commerce Ministry to establish “new beachheads and strengthen our presence in newly opened up markets,” the Minister of State for Commerce and Industry, Mr Jyotiraditya M Scindia, wound up a 11-day official visit to key Latin American countries on Friday, providing a fresh impetus to market diversification moves spearheaded by India in the wake of world economic slowdown.
Official sources told Business Line here that the Mr Scindia set off visits to three key Latin American countries beginning with Brazil on April 27 and ending up in Argentina interspersed with a visit to Montevideo (Uruguay) after New Delhi extended the “Focus: LAC” integrated programme, launched to leverage the potential markets, up to March 2014 recently.
Trading pacts
The “Focus LAC” focuses on deepening institutional mechanism of cooperation, improved market access and economic infrastructural facilities. India has signed a Preferential Trading Agreements (PTA) with Mercosur, comprising Argentina, Brazil, Paraguay and Uruguay which came into effect from June 1, 2009, as also with Chile and joint commissions with most of the major LATAM countries.
In fiscal 2010-11, India's aggregate export to LATAM countries fetched $105 billion, while its imports from this region were $161 billion, leaving the trade balance in favour of these emerging and developing countries.
In his visits to three of the major members of Mercosur, the sources said Mr Scindia underlined the importance of expanding the existing PTA by augmenting the number of products covered and raising the tariff concessions agreed by each side.
Items of trade
The major products covered in the Indian offer pertained to meat and meat products, organic and inorganic chemicals, dyes and pigments, raw hides and skins, leather articles, wool, cotton yarn, glass and glassware, machinery items, electrical machinery equipment, optical, photographic and cinematographic apparatus.
The major products covered in the tariff concession list of Mercosur for import into India include food preparations, organic chemicals, pharmaceuticals, essential oils, plastics and articles, rubber and rubber products, tools and implements, machinery items, electrical machinery and equipment.
Tax treaty
In his talks with Argentina's Minister of Industry, Ms Debora Giorgy, at Buenos Aires, Mr Scindia drew the issue of restrictions on imports of finished pharmaceutical products from India to which his counterpart responded that as an interim step Argentina would purchase drugs worth $150-200 million, prior to finding a solution to the issue.
Mr Scindia also indicated the need to conclude Double Tax Avoidance Agreement (DTAA), Bilateral Investment Promotion & Protection Agreement (BIPA) with a view to widen engagement at the institutional level and cement the strategic relationship.
He proposed similar institutional machineries with Uruguay and also the need to step up existing trade volume of $110 million each with the two countries to $1 billion before long.
With as many as 43 countries in the LATAM region, Mr Scindia's 11-day visit to major countries of Mercosur and Brazil as a leader of the Committee to devise a strategy for enhancing trade and investment in the LAC would definitely help derive dividends in the short- and medium-term since India shares a lot of similarities and complementarities, trade policy analysts here said.
‘One more opportunity'
They added that the visit has provided one more opportunity to work together in the midst of altering economic axis of the global scenario and increasing South-South cooperation.
In his sojourn in each important country he visited, the potential areas of cooperation between India and these countries included information technology, oil and gas, textiles and chemicals and pharmaceuticals, the sources said.