India's exports to Latin America likely to be highest in a decade in FY23

Exports crossed $16 billion as of February; trade deficit shrinking from pre-pandemic levels

A surge in Indian exports to its Latin American counterparts, post-pandemic, would suggest a renewed push in trade ties between these regions. As of February 2023, Indian exports to the region have crossed $16 billion and are likely to be the highest in a decade in FY23.

With close to $15 billion in exports to the 43 countries in Latin America (according to the commerce ministry, which has Caribbean nations) in 2021-22, India’s merchandise exports had recorded a 67 per cent jump since 2018-19.

Though India’s imports from the region outstrip its exports, data indicates that the trade deficit is narrower than it was before the pandemic.

With over 660 million people residing in the region, Latin American countries make for about 8.2 per cent of the world’s population and have a combined gross domestic product (GDP) of more than $5 trillion.

The region is significant for India. Only last month, foreign minister S Jaishankar went on a nine-day visit (April 21 to 29) to Guyana, Panama, Colombia and the Dominican Republic.

While India mostly imports products like precious/semi-precious stones, pearls, animal fat and vegetable oils from Latin America, there has been a surge in petroleum exports, which hit over $4.4 billion as of February in 2022-23. This is similar to India’s petroleum imports from the region. India's petroleum exports were earlier significantly lower than its imports from the region.

Jaishankar has highlighted energy as an important area of partnership.

Just five countries – Brazil, Argentina, Colombia, Chile and Peru – account for about 70 per cent of all of India’s exports to the region. India’s exports to Brazil have more than doubled from $4 billion before the pandemic and are nearing $10 billion, the highest in the region.

While still below the 2012-13 figure of $41.02 billion, overall trade between Latin America and India has been around $35-40 billion in the last two years. It had fallen to under $25 billion in 2020-21 after Covid-19 took hold.

India and the Mercosur trading bloc (comprising Brazil, Argentina, Paraguay and Uruguay) were reportedly in talks to expand their preferential trade agreement, which grants the trading partners various tariff concessions.