Why is India reaching out to Latin America?
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Source: The post is based on the article “Why is India reaching out to Latin America?” published in Live Mint on 7th April 2023.

Syllabus: GS 2 – International Relations

Relevance: India and Latin America Relations

News: India is trying to strengthen its relations with Latin American countries like Brazil, Argentina, etc. The article explains India’s interest in Latin America.

What has been the history of relations between India and Latin America?

After independence, India had a very limited diplomatic and economic reach. This forced India to prioritise ties with its neighbourhood and major Western powers.

However, in its first annual report in 1948, the external affairs ministry said its focus on Latin America was limited despite India’s interest in the region.

There were also domestic challenges with Latin American countries. Due to which, these two countries were not able to build their relations.

Why is India now interested in Latin America?

First, trade with Latin America has increased dramatically. Since 2000, trade has increased by roughly 25% each year and is now close to $50 billion. The rise has been driven by industries such as automobiles.

Second, India’s desire to diversify its energy dependencies has pushed it towards Latin America. Indian energy majors like ONGC are active in Colombia and Bharat Petroleum in Brazil. 

Renewable energy is also a priority, with opportunities for collaboration in ethanol and green hydrogen.

The region also contains critical deposits of resources such as copper and lithium, which will be critical to India’s energy transformation ambitions.

How has Latin America responded to India’s outreach?

Latin America has welcomed increased Indian interest and has tried to attract investment. The Panamanian foreign minister pointed out that Latin American nations can connect Indian companies with the wider Americas market.

The region has suffered due to Covid, Ukraine war and their economies are also struggling with poverty and inequality. In such a scenario, increased economic engagement with India is a key priority for many of the region’s economies.

What are the challenges?

India’s trade with Latin America is negligible in comparison to China’s enormous $450 billion trading in that region. China is also a major lender to the region.

While other businesses are competing to take advantage of Latin America’s abundant natural resources, Indian businesses have lagged behind.

Hence, in order to overcome these challenges, India will need to step up its economic diplomacy and join regional economic institutions like the Inter-American Development Bank.


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