Focus India-LAC - May 2017

The framework for negotiation of a Trade Agreement with Peru was finalised during the visit of  Vice Minister of Foreign Trade, Edgar Vasquez to India in March. The agreement falls short of a free trade agreement that Peru was willing to negotiate. India  prefers to move slowly though both sides agreed to include services and investments within the ambit of the negotiations. Peru is one of the more dynamic economies of the region. The election last year of the market-friendly economist Pedro Pablo Kuczynski as President bodes well for the bilateral relationship. India’s exports April-December 2016 amounted to $ 529 million ($ 703 million in 2015-16 and $ 819 million in 2014-15). Trade is more or less balanced, slightly in Peru’s favour. Peru is interested in export of fruits, minerals and other commodities. India seeks greater market opportunities in pharma, engineering, textiles and other manufactures. Investments by Indian companies have been small; the mining sector still presents regulatory, infrastructural and other challenges.
An important aspect of the impact of US-LAC relations on India’s relations with that region relates to energy. LAC provides more than 30 percent of the oil the US imports, is a growing importer of U.S. natural gas and the largest market for refined petroleum products from the US. US companies are big investors in Argentina, Brazil, Mexico, and Venezuela. If the US imposes tariffs and other controls on imports (NAFTA does not cover energy); reduces regulation or otherwise forces or attracts US investment back, LAC energy exporters, reliant on this sector, could begin to look elsewhere.
Indian companies have invested billions of dollars upstream in Venezuela, Brazil and Colombia. ONGC (Videsh) Ltd is looking at Mexico, where since the energy sector was opened up in December 2013, 48 new operators from 14 countries have bid for projects amounting to $49 billion. Imports of crude oil from Venezuela, Brazil, Colombia, Mexico and Ecuador range between 10 and 15 billion dollars annually, increasingly independent of term contracts with the national oil companies. Reliance Industries Ltd. exported over 3 billion dollars worth of petroleum products to Brazil in 2014-15. Excess refining capacity in India complements lack of the same in LAC, which currently imports most of its needs from the US.
India’s imports of crude from LAC have fallen by volume and value. This is partly due to higher imports from Gulf suppliers, but also circumstances in LAC markets. Colombia’s falling production, and slim discount margins for West Texas quotes reduced imports from $ 1.77 billion in 2014-15 to $ 304 million in 2015-16 and to $ 128 million April-December 2016. Imports from Brazil halved from $2.53 billion (2014-15) to $ 1.24 billion (2015-16).
Venezuela, India’s principal supplier, which acccounted in 2015 for almost 12 percent of India’s crude imports, has a lower market share in India because of declining crude production and heavy obligations under oil-for-loan deals with China and Russia. Imports from Venezuela fell from $11.7 billion (2014-15) to $5.7 billion (2015-16). National oil company PDVSA expects shipments to India to drop to 360,000 bpd this year. Its direct shipments to Reliance fell by 61% between 2013 and 2016. CNPC entered the Indian market with more than 180,000 bpd of Venezuelan crude in 2016. Russia's Rosneft, which has a producing joint venture with PDVSA, and last year bought a 49 percent share of Essar Oil, will export its Venezuelan crude production to India and extend its retail operations here.
May 11, 2017


E-mail me when people leave their comments –

You need to be a member of Ananta Centre to add comments!

Join Ananta Centre

About the Author

Ambassador Deepak Bhojwani

Former Ambassador of India to Colombia, Venezuela and Cuba and Distinguished Fellow, Ananta Centre

Ambassador Deepak Bhojwani joined the Indian Foreign Service (IFS) in 1978. He retired in February 2012. During his career, he was accredited as Ambassador in seven Latin American countries, resident in Colombia, Venezuela and Cuba, concurrent in Ecuador, Costa Rica, Cuba and the Dominican Republic, and was Consul General in Sao Paulo. He served abroad in three Continents – Asia (Indonesia and Malaysia), Europe (Spain and Czech Republic) and Latin America.

In the Ministry of External Affairs, he served in the Divisions dealing with Administration; West Asia and North Africa; US and Canada; and had a brief stint at the United Nations.

Ambassador Bhojwani also served as Private Secretary to the Prime Minister of India, Mr P.V.Narasimha Rao for two years from 1994 to 1996, and as Special Assistant to the Minister of State for External Affairs and for Science and Technology, Mr K.R.Narayanan, from 1985 till 1988.

He writes extensively on Latin America and its relations with India. He has written a book published in 2015 titled ‘Latin America, the Caribbean and India: Promise and Challenge’.

He is currently a Consultant for Latin America and the Caribbean through his firm LATINDIA (

Ambassador Bhojwani also serves as Independent Director on the Board of Bharat Petroleum Corporation Ltd., one of the largest state oil and gas companies of India.

Since January 2017 he has been Country Manager and Director, Magotteaux Industries Pvt. Ltd.

You need to be a member of Ananta Centre to add comments!

Join Ananta Centre