PM Modi visits Guyana: Why South American nation is crucial to India

South American nation has become a significant contributor to world crude supply

Prime Minister Narendra Modi on Wednesday arrived in Guyana, the first visit to the South American nation by an Indian PM in 56 years.

 

Modi was received by President Irfaan Ali and more than a dozen cabinet ministers. After the G20 Summit in Brazil, Modi is set to participate in the second India-CARICOM Summit. He will also address the National Assembly of Guyana and meet the Indian diaspora which comprises nearly 40 per cent of the country’s population.

 

Indira Gandhi visited Guyana as India’s Prime Minister in 1968. In April 2023, External Affairs Minister S Jaishankar visited Guyana and three other Latin American countries: Panama, Colombia and Dominican Republic. He is the first Indian foreign minister to have made a bilateral visit to these nations.

 

 

Outreach to Guyana

 

In recent times, India has significantly enhanced its engagement with Guyana. It supplied two HAL-228 aircraft under a line of credit and provided solar lighting for about 30,000 indigenous communities.

 

As many as 800 Guyanese, including President Ali, are the alumni of Indian Technical and Economic Cooperation (ITEC), a capacity-building platform of the Ministry of External Affairs (MEA).

 

India's outreach to Guyana is based on the vast economic potential the tiny nation carries. According to the International Monetary Fund, Guyana’s economy grew by 62.3 per cent in 2022, the highest real GDP growth in the world in that year. After the recent discovery of oil reserves, Guyana has become a significant contributor to the world crude supply.

 

India, whose import dependence on crude oil surged 87.7 per cent in 2023-24, has spent nearly $132.4 billion on importing fuel. New Delhi sees Guyana's rich oil reserves as an opportunity, particularly for diversifying its fossil trade.

Acknowledging this, the MEA said, “Guyana is, as you know, on the cusp of an economic and developmental transformation with major discovery of oil and gas. We hope to partner them in a number of fields including in hydrocarbons... It is the fastest growing economy in the world and we will have opportunities for partnering [with] them in diverse fields.”

 

Last Frontier to Strategic priority

 

For a long time, the Latin American region was considered as the ‘last frontier’ in Indian foreign policy, suffering from ‘out of sight, out of mind’ syndrome. International affairs expert Hari Seshasayee argues that for most of the 21st century, the Latin American region was managed by the Minister of State for external affairs.

 

However, the situation changed significantly with Jaishankar taking charge of the ministry. He has made bilateral visits to eight Latin American nations till now. He visited Mexico in 2021, Argentina, Brazil and Paraguay in 2022, and Panama, Guyana, Colombia and Dominican Republic in 2023.

 

Since 2014, PM Modi has made five visits to the region, including the one to Guyana. India invited five Latin American nations during its G20 presidency in 2023.

 

Acknowledging India's support in their development journey, Dominican Republic, Guyana and Barbados have decided to confer their highest national honour on PM Modi. The Dominican government described India's decision to donate Covid vaccines as a ‘generous gift’ in their fight against pandemic.

 

Increase in trade

 

India's trade with Latin American nations has skyrocketed in the past 20 years, from $1.6 billion in 2000 to over $43 billion in 2024. Its total exports to Brazil ($6,022 million) is higher than that to the traditional partners such as Japan ($5,156 million), Indonesia ($5,988 million), Vietnam (Rs 5,470 million) and Thailand ($5,038 million).

 

Key exports of India include vehicles, pharmaceuticals and chemical products, and imports mainly limited to oil. Another sector showing promising growth is the IT-enabled services.

 

According to Seshasayee, Indian businesses see Latin America as a ‘goldilocks zone’- between highly regulated and competitive markets of US and Europe, and the less competitive markets of Africa that have lower purchasing power.

 

India's total private investment in the region comes around $17 billion. Though this remains low when compared with China, having annual trade of around $450 billion with the Latin American countries, the fact that Indian companies created thousands of jobs in value-added sectors remains significant. Just IT companies are supposedly employing over 40,000 people, a majority of which are locals.

 

In the recent visit, PM Modi is set to co-chair the second India-CARICOM Summit, consisting of 20 Caribbean countries. India is hoping to partner with them on a range of issues from digital public infrastructure, connectivity, technology, to healthcare and renewable energy.    PM Modi is in Guyana till November 21. He is here on the last leg of his three-nation visit after attending the G20 Summit.