Business Potential in Latin America

OVERVIEW

• Wide geographical area over 30 countries.• LAC region is a market of 508 million peoples• It accounts for about 5% of world trade• Second fastest growing region in the world• Rich in natural resources• Though LAC has undergone profound and irreversible

political and economical transformation becoming more stable now

• Therefore INDIA establish FOCUS-LAC

LAC Countries1.Argentina 12.Costarica

2.Chile 13.Elsalvador

3.Brazil 14.Guatemala

4.Mexico 15.Honduras

5.Paraguary 16.Nicaragua

6.Urugary 17.Barbados

7.Venenzula 18.Belize

8.Bolivia 19.Guyana

9.Colombia 20.Jamaica

10.Equador 21.Trinidad & Tobago

11.Peru 22.Antigua

23.Dominica 34.Dominican Republic

24.Grenada 35.Falkland Islands

25.Montserrat 36.French Guiana.

26.St.Kitts-Nevis-Anguilla. 37.Guadeloupe

27.St Lucia 38.Haiti

28.St Vincent 39.Martinique

29.Bahamas 40.Netherlands Antilles.

30.Bermuda 41.Panama

31.BritishVirgin Islands. 42.Suriname

32.Cayman Islands 43.US Virgin Islands

33.Cuba 44.Turks &Caicos Islands.

LAC at GlanceCUUNTRY POPULATION GDP(in Bn) TOTAL IMPORT IMPORT FROM

INDIA 1US$=LOCAL CURRENCY

ARGENTINA 37.9 177 21.2 154 2.82 PESO

BRAZIL 170.0 789 62.8 556 2.38 REAL

PARAGUARY 5.7 7 3.27 8 6115.2 GUARANI

CHILE 15.2 100.7 23 100 550.76 PESO

BOLIVIA 8.7 9.3 1.86 7 BOLIVIANO

ECUADOR 13.0 32.1 7.5 21 US DOLLAR

PERU 26.0 77.2 9.8 76 3.3 NEW SOL

VENEZUELA 25 131 16.02 51 214 6BOLIVAR

COSTA RICA 4.0 19.6 7.8 17 456.1COLON

GUATEMALA 11.98 27.4 6.85 20 7.7 QUETZAL

HONDURAS 6.86 8 3.46 7 18.5 LEMPERA

NICARANGUA 5.36 5 1.98 5 16.1 GOLD CORDOBA

EL SALVADOR 6.59 16.5 5.73 4.3 8.75 COLON

PANAMA 2.96 14.5 7.5 41 1 BALBOA

Why LAC TRADE

• Considering the potential of the market in the LAC region an integrated program FOCUS LAC was launched

• Export Promotion Councils, Chambers of Commerce & Industry, EXIM Bank, ECGC etc. involved in trade promotion efforts

• Granting various incentives to Indian exporters and launching

export promotion measures 

• Focussing on the Latin American region, with added emphasis on the eight major trading partners of the region

SALIENT FEATURES OFTHE LAND OF EL DORADO

• A vast landscape

• Fourth largest continent in the world

• Huge amount of Copper, Tin, Gold, Iron, Lead, Zinc and other Minerals

• Widened gap between rich & poor

• Though it is an America not real America

SIMILARITIES & DISSIMILARITIESINDIA AND LATIN – SOUTH AMERICA

• MAJORITY OF THEM AGRARIAN• SPEEDY PRIVATISATION• STRONG NATURAL RESOURCES• MIDDLE CLASS MYSTIQUE• MOVEMENTS TOWARDS FREE TRADE.• HIGHER V/S LOWER PRODUCTIVITY• HIGHER PER CAPITA INCOME V/S LOWER PER

CAPITA INCOME LEVELS• HIGHER LITERACY V/S LOWER LITERACY RATES

India trade with LAC in 2007COUNTRY INDIA IMPORT in

million $INDIA EXPORT in million $

TOTAL TRADE in million $

BRAZIL 2200 958 3158

MEXICO 1127 868 1995

ARGENTINA 328 1002 1330

CHILE 208 2211 2419

VENEZUELA 95 489 584

COLOMBIA 476 80 556

PERU 252 210 462

ECUADOR 61 102 163

PANAMA 50 306 356

URAGUARY 49 5 54

COSTA RICA 30 40 70

HONDURAS 36 2 38

CUBA 27 1 28

DOMINICAN REPUBLIC 26 2 28

EL SALVADOR 18 2 20

NICARAGUA 34 - -

LANDS OF UNKNOWN LANGUAGE

BUT KNOWN BUSINESS

PROSPERITY

AgreementsPTA AGREEMENT

WITH INDIA

MERCOSUR Brazil,Argentina,Paraguary,Uraguary, Venezuela

Andean community Colambia,Bolivia,Ecuador,Peru.

NAFTA Mexico.

SICA Panama, Costa Rica,Nicaragua,Honduras,El Salvador, Dominican Republic,Belizi,Guatemala

CARICOM Trinidad & Tobago,Jamaica,Haiti,Guyana,Suriname,Bahamas,Barbados,Dominica,Grenada,Antigua & Barbuda,St Lucia,St Kittis & Nevis's Vincent & Granadines,Montserrat

Others Chile, Netherlands Antilles

Exports to LAC

- Drugs & PharmaceuticalsDrugs & Pharmaceuticals

- Chemicals

- Textiles

- Transport equipment

- vehicles

- Dyes and intermediaries

- Machinery & instruments

-Plastics

Potential Items of Trade with LAC

Import from LAC

-Minerals (lead, copper, Zinc)-Minerals (lead, copper, Zinc)

- Agro-products

- Vegetable oils

- Pearls & semi-precious stones

-Fruits & vegetable extracts

ARGENTINAARGENTINA

CHILECHILE

MEXICOMEXICOCOLUMBIACOLUMBIA

BRAZILBRAZIL

SELECTION CRITERIA

• HIGH POTENTIAL FOR GROWTH

• POSITIVE ATTITUDE TOWARDS INDIA

• HIGHLY RESOURCEFUL

• FAST DEVELOPMENT OF BASIC cOMMERCIAL INFRASTRUCTURE

• COMFORTABLE FOR BUSINESS DEALINGS

EXPORTING TO ARGENTINA

• TARIFFS– Maximum 22% for finished products for items

of local consumption– 11% tariff for raw materials, capital goods and

medicines– 35% duty applicable to electronic items and

luxury items– 6% tax on imported consumer goods– 3% statistical tax– 35% profits tax while they are directly sold in

the market

FOCUS PRODUCTS OF ARGENTINA

HIGH• Apparels & Clothing•Vehicles & Spares•Dyes / Intermediates•Pharmaceutical•Chemicals

MEDIUM•Essential oil & Toiletries•Electrical Machineries•Carpets & Floor Coverings•Ships / boats / floats•Cutleries

LOW• Fertilizers•Oilseeds•Rubber & Rubber Products•Plastics & Articles •Spacecrafts / Aircrafts

BRAZIL’S ECONOMIC OVERVIEW

• Well developed agricultural, mining, manufacturing & service sector

• Floating exchange rate, an inflation targeting regime,& tight fiscal policy

• In 2003-2005 records its first trade surplus since 1992

• To maintain economic growth & make the govt debt burden more manageable

BRAZIL

• Land with Iron Ore, Nickel, Gold, Uranium, Crude Oil and Timber

• Soya meal, Orange, Coffee – Highest productivity

• Per capita income crossed $4300

• Main Trade Partners - EC, US, L.A. Japan

• Surplus balance of payment

BRAZIL

• People love Indians/Indian products too• Sao Paulo or Rio De Janeiro – Twin

glamorous cities• Most populous country in Latin America and

ranks 6th in the world• Literacy level crossed 90%• Transportation, communication and banking

on the fast track development

FOCUS PRODUCTS OF BRAZIL

HIGH• Vehicles and Parts•Miscellaneous Chemicals•Apparels / Fabrics•Pharmaceuticals•Handicraft and Kitchen Articles

MEDIUM• Sound recorders/equipment•Yarn / Fiber•Plastics•Optical, Photographic & Cinematographic Equipments•Paper Products

LOW• Iron & Steel.•Fish, crust and moll.•Spirit & Beverages.•Edible fruits and nuts.•Furniture and Bedding.

CHILE

• Strategic location demarcating Atlantic and Pacific Ocean

• Subject to frequent earthquakes and active volcanism

• Literacy level 95%• Per capita income $4000• Resources: copper, timber, iron ore, nitrates,

precious metals

CHILE• Exports: Copper, Bleached Pulp, Fish meal,

Fruits (grapes), Timber, Seafood, Canned Fruits, Sugar beets & Beans

• Major Partners: US, Japan, EC, Brazil, Germany , S. Korea, U.K.

• Imports:Vehicles, Computers, Oil, Machinery, Electronic Equipments, Chemicals & Pharmaceuticals

• Others:Ports – Antofagasta, Charnol, Pueto – Inland Waterways, Highways, Railroads and communication through intelsat

FOCUS PRODUCTS OF CHILE

HIGH• Apparel & Clothing•Vehicles & parts thereof•Pharmaceutical•Organic Chemicals•Leather Goods.•Residues / wastes of food Industry

MEDIUM• Textile & Yarn•Electrical Machinery•Plastics and articles thereof•Paper & paper products•Fish and fish preparation

LOW• Carpets & Floor covering•Raw hide & skin•Iron & Steel•Mineral fuels, oil & products•Household articles

TRADE PERFORMANCE & REGULATIONS IN CHILE

• Relatively low customs duty at Chile – Flat rate of 11% CIF

• In addition VAT @ 18% on all Imports except Capital Goods

• Straight forward deal with parties but license for imports prevails

• FTZ established in Northern Iquique and South Punta Arenas

• 100% Foreign ownership is permissible if Chile is benefited

TWO STAGES TAXATION

Stage 1: Flat rate15%

Stage II: ProgressiveScale individual TaxationFrom 5% - 50%

• Exports are exempted from tax.

• Indirect tax 0.1% stamp duty on credits and transactions.

• 50% on luxury items like Gold, Silver, Ivory and Furs

• 1 – 25% on gifts and antiques

COLUMBIA• Highlands subject to volcanic eruption. Periodic

drought

• Crude oil, Natural gas, Coal, Iron ore, Nickel, Gold, Copper & Emeralds

• Exports – Petroleum, Coffee & Coal

• Per capita income crossed $5000

• Imports – Industrial equipment, Transport Equipment, Foodstuffs, Paper Products, Telecom Equipments & Chemicals

COLUMBIA

• Import Duty – flat rate 11% + vat 18%

• Documents – Import License + usual documents

• Good railways, Highways, ports for frequent movements of cargo

FOCUS PRODUCTS OF COLUMBIA

HIGH• Cotton• Vehicles• Organic Chemicals• Apparel &Clothing• Pharmaceuticals

MEDIUM• Miscellaneous Chemicals• Manmade filaments• Wool and woolen items• Plastics• Optical, photographic & cinematographic requirements.

LOW• Coffee and Tea• Carpets• Iron and Steel• Cereals• Rubber

MEXICO• Highest Per capita Nation amongst all

• NAFTA membership elevated its position & status

• Main partners: US, EC & Japan• Becoming Modern suddenly

• Crude oil, Copper, Silver, Gold, Lead, Zinc, Timber and Natural Gas – major sources

TRADE - MEXICO

• Merchandise not meeting minimum quality – not imported

• Items such as explosives, pollutants, inflammables, radio, active products require permits

• Import License: Valid for 9 months

• Advalorem Tariff from 0% - 20% and vat 15%

FOCUS PRODUCTS OF MEXICO

HIGH• Apparel & Clothing.•Organic Chemicals•Pharmaceuticals•Tanning & Dying Extracts•Cotton

MEDIUM• Coffee & Tea•Spices•Clothing Accessories•Perfumery Cosmetics•Wool / Woolens products

LOW• Raw Hides•Paper and paper products.•Cereals.•Furniture & Bedding.•Rubber Produces•Wood & Wood Articles

FOCUS PRODUCTS OF VENEZUELA

HIGH• Apparels & clothing Accessories•Vehicles & components.•Cotton•Pharmaceuticals

MEDIUM• Organic chemicals• Iron & Steel• Leather & Leather Goods•Plastics•Tanning / Dying and Inks

LOW• Fish•Electrical Machineries•Miscellaneous Chemicals•Rubber Products

FOCUS PRODUCTS OF PERU

HIGH• Vehicles & Components•Iron & Steel• Pharmaceutical•Electrical Machinery•Apparels & Fabrics

MEDIUM• Rubber & Rubber Products•Tools & Implements•Coffee, Tea and Spices•Tanning & Dying Extracts•Yarn

LOW• Medical & Surgical•Tobacco Products•Cereals•Plastics•Cinematographic Equipments.

TRINIDAD & TOBACO

HIGH• Cereals•Pharmaceuticals•Vehicles•Apparels & Fabrics•Cotton

MEDIUM• Coffee & Tea•Spices•Cultured Pearls, Semi – Precious Stones, imitation Jewellery•Man made Filaments• Toys and Games

LOW• Edible Fruits & Nuts•Essential oil•Plastics•Tobacco•Fish & Fish preparation

SUCCESS OF INDIAN BUSINESS

• Mexico City Exhibition of ITPO-135 participants

• Visits of Indian President in 1998 to Peru & Brazil; PM’s visit to Trinidad & Tobago in 199 created unprecedented awareness about India

• Uruguay Vice President’s visit to India with a large delegation and MOU with CII in Dec 1999

• Quick response to all the efforts reached Indian business to touch

MEASURES BY THE GOVERNMENT OF INDIA

• Joint Commissions• Commercial attached in 13 countries.Trade

analysis center – ITPO• EXIM Policy Initiative• Textile Quota – Double Weight age• Double Weight age for status• Publicity – Dept. Store – BSM – catalogue show• Top Export Performer Award

Market Development Assistance

Economic ClassAIR – India

@ 90% to SSI Units

@ 75% - Non SSI UnitsSubject to Rs. 90,000

per event(For study Tour)

Rs. 81,000 byNon – AIR India

Market Development Assistance

• Rs. 1,40,000 – participation in fair & BSM• Minimum stay 4 days in a single country.• Minimum 3 activities eligible in a year subject 5

% growth• Status holders / consortium of SSI maintain

warehouse : 75% 50% 25% in three years – Rental• Corpus Rs. 2 cr. For promotion from 2000 - 01

COMMON TO ALL THE NATIONS

• Political & Economic

• Debt & inflation became overwhelming

• Private sector became overcrowded and at remarkable speed

• Foreign exchange controls & import barriers

• Ineffective legal system

• Trust is only with close friends & Relatives

India – South America

• Low priority trading destination for Indian Business so far

• Imports growth in 1996 – 1999

• Average growth per annum

• India’s trade with Latin America 6 times in 6 years

• Total imports of Latin America is $250b. But India’s share is only 0.2%.

Panama23% Mexico

30%

Argentina90%

Chile35%Venezuela

50%

Key factors in adverse impact on India’s trade

Language

Lack ofInformation

Inflation

Tariffs

Absence of Shipping Lines

Distance

SCOPE FOR FUTURE

• India has good relations with 17 countries including Caribbean

• Balance of Trade is Favorable

• Bahamas, Haiti, St. Kitts, Guinea, Virgin Islands, Uruguay – can not be ignored

• Presence of local Indian community

• Good potential for Indian business in Future

Indian Business in LAC

Nalco – Investment in Chilean bauxite mine

Suzlon – setting up wind turbine plant in Brazil

TATA consultancy service – opened office in Lima (Peru)

TCS already has office in Mexico, Uruguay, Argentina,

Chili, Brazil, Ecuador, and Colombia

IFFCO ( Indian Farmers Fertilizers cooperation ) invested

$ 25 mio in American Petro gas ( Canadian company)

Godrej – acquired Argentinean hair care company-

Argencos

India / LAC - FDI & Export ,import

Country FDI $ billion Expt $ mio Impt $ mio

Brazil 25.95 2191 3415

Chili 12.90 278 908

Mexico 11.42 1140 1085

Colombia 7.20 504 449

Argentina 4.90 342 876

Peru 4.76 307 72

Panama 1.77 25 5

Costa Rica 1.32 47 29

Uruguay 1.14 48 11

Indian Business in LAC

Five year multi entry visa for Indian

businessmen visiting Argentina free of cost

for 5 years.

Stay during e ach visit- 90 days extended

by another 90 days

Major items

Textile & Garments

Drugs &Pharma

Sea FoodsJuteItems

Leather Goods

Spices

EngineeringGoods Tyres & Tubes

MAJOR ITEMS FOR IMPORTS FROM LAC

Iron & SteelNon – Ferrous

MetalCrude

Minerals

SugarPVC Paper &

Pulp

Major International Ports

Buenos Aires

BarranQuilla

Santos Salvador

AfricaIquique -

Chile

ColonManzanillo

Panama City

AcapulcoMexico City

Port of SpainTrinidad Tabago

Puerto CabelloLa Guaira - Venezuela

CallaoCuracao - Peru

MARKET APPROACH

Participate in Trade Fairs

AndExhibitions

Buyer – Seller

Meet / Sales Tours

Indian MissionCatalog Show

Build a strong Relationship oriented

Business