India Sets Its Sights on Latin America

The economic resilience of Brazil, Russia, India, and China – known collectively as the “BRIC” nations – has been remarkable, and has resulted in an increasing amount of trade and investment between the emerging giants. A big part of this story is India’s growing interest in Latin America.

“More and more Indian companies are considering investment in the region,” says Rengaraj Viswanathan, India’s former ambassador to Venezuela, as well as a former Consul General of India to Sao Paulo, Brazil. “Brazil, Mexico, and Colombia are the destinations of choice for Indian investors.”

India is known around the world as a country with strong IT capabilities. While tech is a huge part of its interest in Latin America, India  has broad economic concerns that cover a number of industrial sectors, including manufacturing and resources. To advance its interests in Latin America requires an aggressive trade stance – something the government of India is pursuing.

“India sees Latin America’s potential in the long term,” says Viswanathan. “It already has PTAs (Preferential Trading Areas) with the Mercosur trade block and Chile. Now it needs PTAs or FTAs (Free Trade Agreements) with Mexico, Peru and Colombia, because its role at the moment is modest.”

Viswanathan says that at present India’s exports to these countries are at a disadvantage when compared to countries that already have agreements in place. That said, Indian companies have invested $12 billion in key sectors, and that number is sure to increase. A big part of that push will be in high technology.

Indian Tech Investment in LatAm

“At the regional level, we now have a presence in eight countries with about 10,000 employees,” Ankur Prakash, vice president of Latin American operations for Indian tech giant Tata Consultancy Services (TCS), recently told Mexico’s El Economista. “We want to be a company with between 20,000 and 22,000 employees in the region.”

In Mexico, TCS has 3,000 people working out of its global IT delivery service centers in Guadalajara and Queretaro – where it recently expanded – as well as in its offices in Mexico City. The company, which is the IT services division of the Indian industrial giant Tata, expects to see additional employees in Argentina, Brazil, Chile, Colombia, Ecuador, Peru and Uruguay. This investment in people delivers the potential for a long term deepening of cultural, political, and economic ties.

“The TCS center in Montevideo, Uruguay, provides training and internship for students from all over Latin America,” says Viswanathan. “In most cases, the country heads are local Latinos.”

Of course TCS isn’t the only big Indian company present in Latin America, but it does reflect a larger trend which is supported back on the subcontinent, where interest in Latin America is at an all-time high.

India vs. China

In the first decade of this century India did about $20 billion of trade with Latin America. This is now aided by new technologies supporting innovative trade platforms such as Mercatrade.com, a B2B site that matches buyers and suppliers active in Latin America. The push is on to make more progress. However, China is clearly the number-one competitor among emerging markets.

“India is still not as ambitious as China, nor is its scale comparable to China’s,” says Viswanathan. “China is bigger and faster. Then again, they are not constrained by democracy, diversity and human rights concerns.”

But these factors are strengths, too. Viswanathan says that India has a lot of synergies and complementary strengths with Latin America that differ from the advantages offered by China. Reduced tariffs and a push to build cultural ties are making a big difference. This is one reason why TCS is looking to grow its Latin America workforce by more than 100 percent in the next three years, building on its decades-long presence in the region.

“We do not intend to open any more offices,” TCS’s Prakash told El Economista. “Instead, we will be growing in the offices we already have.”

That means the Mexican cities of Guadalajara and Queretaro will remain a central part of TCS’s strategy in Latin America. It makes sense. Mexico is embracing technology, particularly in the financial and telecommunications sectors, with a burgeoning middle class and increasingly skilled workforce.

“Mexico has potential and advantages as part of NAFTA, which Indian companies can take advantage of,” says Viswanathan. “And, of course, Mexico has a rivalry with Brazil, and will be happy to be used by the USA.”

Two-way Investment

Latin America is increasing its interest in India, too, and it is coming from all over the region.

Mentor Villagómez, Ecuador’s new ambassador to India, has stated that a strategic relationship with India is a key objective of the South American country, and the Government of the Province of San Luis in Argentina recently announced that it had opened its first commercial, cultural and tourism office in the city of Chennai in southeast India. A large delegation with representation from 34 companies, as well as 21 officials – including mayors and ministers – traveled to India as part of the announcement.

“Many provinces in Latin America keep sending delegations to India,” says Viswanathan. “San Luis in particular is a province with a distinct mindset and vision; the delegation is going to Chennai because there are useful contacts there.”

The news from Argentina with regard to India is encouraging: little to no tariffs on 900 products (both countries have signed a Bilateral Investment Promotion Agreement, or “BIPA”), with Indian companies employing about 7,000 Argentines.

That said, the big players are still Mexico and Brazil, with plenty of room to grow.

“More and more companies are considering investment in the region,” says Viswanathan. “Brazil in particular is a strategic partner, with a common global agenda with India. So it needs to be given special treatment. For example, Mexico and Argentina are opposed to expansion of permanent membership of UN Security Council. But India and Brazil want to be in there.”

For India, the discovery of the Americas is happening anew, with foreign and economic policy necessarily reflecting the diversity of the region. Clearly, there will be more news coming out of Latin America as Indian companies see more opportunity, and as political and cultural ties deepen.

Timothy Wilson is a Canadian journalist based in Guadalajara, Mexico. He covers business and technology, as well as cultural and political news. Aside from Global Delivery Report, he freelances for the Canadian Broadcasting Corporation and the Globe & Mail, among other outlets. His blog, “La politica es la politica” covers breaking stories from Mexico and Central America. Follow him on Twitter @TimothyEWilson.