NO COUNTRY is more distant from India than Chile. However, that does not hinder growth in trade between the two countries, feels Jorge Heine, Chilean ambassador to India. Having boosted Chile’s exports to India in a big way in the past couple of years, the envoy is looking forward to greater investment flows between the two countries. Mr Heine spoke to Amiti Sen and G Ganapathy Subramaniam about the prospects for stronger economic linkages between India and Chile . Excerpts:
Why do you think economic linkages between India and Chile can improve significantly despite the geographical distance separating the two?
There are tremendous complementarities between India and south America. India needs lots of natural resources for its industrial development and infrastructure. South America is the richest region in the world in terms of commodities and natural resources. We have oil, iron ore, copper, gold, silver and a lot of agricultural produce. A lot of raw materials that India needs is available in Latin America. Geography is not a issue at all. India trades more with Chile than with Bangladesh. We export mostly commodities while India exports high-end products like cars, engineering equipment, chemicals, pharmaceuticals, textiles and diamonds. There is a lot of potential for increasing trade in these areas.
What are your expectations from the India-Chile trade agreement?
The PTA, which was signed last year, is about to be ratified by the Chilean Congress. It will give impetus to further trade. Although it is a modest agreement involving just 300 products, it is a good start. It is the first trade agreement which will be implemented between India and Latin America since the India-Mercosur agreement has not been ratified yet.
Which are the key areas that Indian exporters should focus on?
While India is doing very well in a number of sectors, pharma is emerging as an area where India should focus on. I held a seminar on Indian pharma and Chilean health system in San Diego in June 2005 and Indian pharma companies travelled all over Chile. Since then pharma exports to Chile from India has picked up. I think it is a win-win situation. We need affordable pharma products, while India needs to expand its market.
Are Indian companies being encouraged to invest in Chile?
India’s presence in manufacturing is growing in south America and also Chile, not just in terms of sales but also in terms of joint ventures. Tata Motors is in joint venture with a Brazilian bus company making buses. Essar has a 1.2 million steel project in the region. There is also tremendous opportunity in the IT sector. TCS is in Chile after buying a Chilean company in 2005. HCL is setting up a centre in our country. However, what we are most excited about is the possibilities of tie-ups in offshoring. Companies in India are exploring possibilities of setting up shop in Chile which is in the same time zone as the US east. Our minister of economic affairs will be visiting India in January, along with a number of our IT companies and they will go to Bangalore, Delhi and Mumbai to look at opportunities.
Apart from copper, what are the key items exported from Chile to India?
We are the world’s largest producer and exporter of copper. As much as 75% of our forex earnings comes from copper. However, we are also focusing on exporting other items. We are one of the biggest exporters of fresh fruits, wood and wood products and fisheries. Our exports have grown from $9 billion in 1990 to $60 billion in 2006 mainly because of our efforts to diversify our products. Apart from copper, we are also focusing on other products like fresh fruits. This year our fruit exports to India will touch $8 million from almost nothing three years ago. This has also been possible due to the cold-storage technology which keep fruits fresh throughout their shipping time. This was not possible ten years ago. Using these technologies, India can export tropical fruits like mangoes to south America.
Is India a good market for Chilean wine? Do you think the recent cut in duties will help in increasing exports?
We have 18 distributors of Chilean wine in India. I have seen people enjoy it in cities like Mumbai, Goa and Bangalore. However, the problem is the duties. The price of wine in India is outrageous. While some duties have been reduced, the state governments are going to impose other taxes. We are waiting to see if the total duties would actually go down.