The Vice President of India recently embarked on a diplomatic journey to two Latin American countries, Costa Rica and Paraguay. These nations play significant roles as India’s partners in the Latin American and Caribbean (LAC) region. The visit aimed at bolstering political, economic, and social connections, providing a platform for these relationships to develop and flourish.
Political Diplomacy with Paraguay
India and Paraguay have shared diplomatic relations since 1961. During the recent visit, both parties agreed to strengthen this bond further. In a show of solidarity, Paraguay condemned the terrorist attack on Indian security forces in Pulwama, demonstrating their mutual commitment to peace and security.
Growing Economies: India-Paraguay Trade
Over the last decade, bilateral trade between India and Paraguay has seen evident growth, rising from $40 million to nearly $375 million. The countries are eager to diversify and expand their trade basket, highlighting a potential area for future development. The Vice President’s visit included discussions on India’s involvement in MERCOSUR, a regional integration process established by Argentina, Brazil, Paraguay, and Uruguay, and later joined by Venezuela and Bolivia.
Exploring New Avenues: Cooperation & People-2-People Contact
The voyage also led to the identification of new areas for collaboration such as renewable energy, health, ICT, space, biotechnology, railways, and tourism-related infrastructure. To enhance the bond between the two nations, steps were outlined to ease travel and foster people-to-people contacts.
About MERCOSUR
MERCOSUR, translated as the Southern Common Market, is a regional integration process involving several South American countries. India enjoys a preferential trade agreement with this bloc, strengthening ties with the participating nations.
Diplomatic Ties with Costa Rica
India’s relationship with Costa Rica traces back to 1995 when India appointed an Honorary Consul in San Jose, the Costa Rican capital. This gesture was reciprocated the following year when Costa Rica opened an Honorary Consulate in New Delhi. Today, with growing commercial engagement, Costa Rica ranks as 13th leading trading partner of India in the LAC region, with bilateral trade around $200 million.
Costa Rica’s commitment to becoming a carbon-neutral country by 2021 and its decision to join the International Solar Alliance further endorse the shared vision of sustainable development between the two countries.
Importance of Latin American and Caribbean (LAC) Region for India
| Factors | Significance to India |
|---|---|
| Food Security | India imports pulses from South American countries |
| Minerals Import | Rich reserves of copper, lithium, iron ore, gold, silver in Latin America offer opportunities for increased investments and importation |
| Energy Security | Latin America has 20% of global crude oil reserves. Currently, India sources 15% of its crude oil from LAC countries. |
Challenges in India’s Relations with LAC Region
Despite the progress, challenges remain—political dynamics and rivalries among countries like Brazil and Argentina can affect India’s relations with the region. Economically, while trade has reached $46 billion in 2012-13, it pales in comparison to China’s trade of $250 billion with the region. Additionally, bilateral investments between India and LAC are relatively low, at only four percent of India’s total outward investment. Addressing these challenges could pave the way for stronger associations in the future.
