Focus India-LAC - May 2019

President Ram Nath Kovind visited Bolivia and Chile 28-31 March. While relations with Chile have been steady and indeed growing, Bolivia and India have been troubled by the collapse of the iron ore mining investment by Jindal Steel a decade ago, currently in arbitration. With the left in Latin America on the backfoot, and most countries increasingly wary of China’s deep penetration in the continent, India offers Bolivia an opportunity to diversify economic alliances. The left-wing President Evo Morales may well be re-elected for another term in office later this year. Chile and Bolivia form the Lithium Triangle – reputed to hold almost half the known reserves of lithium in the world - along with Argentina, whose President was in India in February. Reports indicate exploration of lithium, crucial for the energy and telecom industries, could be taken up through the Khanij Bidesh India Ltd (KABIL), a joint venture formed in 2017 by three Indian public sector mining companies – NALCO, Hindustan Copper and Mining Exploration Corporation.

 

The visit reaffirmed Bolivia’s support for India’s permanent membership of the UNSC and other issues such as terrorism. President Kovind was conferred the highest award – the Condor of the Andes. Eight MOUs were signed, centered around mining and energy, though discussions included cooperation in space, renewable energy (Bolivia has joined the India-based International Solar Alliance), IT and infrastructure, including the Chinese-backed transcontinental highway linking Brazil’s Atlantic ports to the Bolivian Pacific. Possibilities exist in lithium exploration, supply of lithium carbide to India, and manufacture of lithium batteries, which India currently imports worth $700 million annually. A joint venture between KABIL and Bolivia’s state owned Yacimientos del Litio Bolivianos (Bolivian Lithium Deposits) (YLB) Corporation, foresees downstream manufacture of the lithium-ion batteries but the Bolivian side insists it be located there. This project is key to India’s mission to popularise electric cars. Bolivia also has extensive reserves of natural gas and will explore possibilities of export to India. India committed a concessional Line of Credit of $100 million. Trade in 2018 was around $875 million, in favour of Bolivia, which exported around $700 million of gold to India. It remains to be seen if Indian industry has recovered its confidence in the Bolivian regime’s attitude towards foreign investors after the Jindal affair. 

In Chile three MOUs were signed. There was coincidence of views on terrorism, support for India’s candidature for permanent membership of the UN Security Council, and non-permanent seat 2021-22. Though China is Chile’s largest trading partner, there was oblique allusion to the South China Sea in the joint declaration through a ‘vision of Indo-Pacific based on international rules-based order that respects sovereignty and territorial integrity of nations, ensures freedom of navigation and overflight… seeks peaceful resolution of dispute in accordance with universally recognized principles of international law, notably the UNCLOS.’ Chile is an important member of the International Solar Alliance. Bilateral trade in 2017-18, at $2.8 billion is growing with the entry into force in May 2017 of the expanded preferential trade agreement, covering over 3000 lines. Chile joined several LAC nations permitting Indian visitors visa-free entry if they have a valid US visa.

Vice President Venkaiah Naidu visited Paraguay and Costa Rica between 5 and 11 March. Trade with Paraguay was around $ 334 million in 2017/8, evenly balanced, though 90 percent of Paraguay’s exports to India comprise soya oil. India’s exports, mainly engineering and pharma, are doing well. Paraguay is a member of Mercosur, the 4-nation trading bloc including Argentina, Brazil and Uruguay, with which India has a partial trade agreement which both sides are negotiating to amplify. The highest-level visitor since relations were established 58 years ago, VP discussed with President Mario Abdo Benitez terrorism, India’s candidature to the UN Security Council – which Paraguay supports – trade, development support which India provides in the form of scholarships, an IT Centre in Paraguay, etc.

The visit to Costa Rica seems to have been ceremonial. VP was conferred an honorary doctorate. Trade around $200 million a year mostly covers Indian automobile exports and some pharmaceuticals. Costa Rica, which counts an Indian expatriate community of a few hundred, is an important member of the Central American trade grouping SICA. The last meeting between India’s External Affairs Minister and the SICA members was held in New York in 2016 – a convenient venue during UN sessions - and postponed thereafter in 2017 and 2018. 

US pressure on India to stop imports of Venezuelan crude was openly displayed by US envoy Elliot Abrams. According to media reports, Foreign Secretary Vijay Gokhale also faced the same questions during his meetings with US State Department early March. Reliance Industries, which imported up to 270,000 barrels per day (bpd) from Venezuela said in a statement to the press that it was reducing its imports and stopping supply of diluents for Venezuelan oil extraction.

According to the Central Bank of Mexico, bilateral trade with India crossed US$ 10 billion in calendar year 2018, making Mexico the largest trading partner of India in LAC and India the 9th trading partner of Mexico. Crude oil at $3.8 billion constituted the bulk of India’s imports from Mexico of $4.92 billion. India’s exports amounted to $5.23 billion.

May 6, 2019

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About the Author

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 (www.latindia.in)

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.

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