A broad ranging discussion I had with the Ambassador at his office in Buenos Aires last week.
The Latin America Interview with Indian Ambassador R. Viswanathan
December 23rd, 2011 Posted in Brazil, colombia, Commodities, India, Infrastructure, Investing, Latin America, Mexico, Uruguay
Recent meetings between high-level representatives from India and Uruguay have produced a number of positive results, including plans to increase cooperation in the agriculture, pharmaceuticals, textiles, automobiles, machineries, IT (link). Cooperation is also being negotiated for the renewable energy sector with a focus on wind energy (link).
“For Uruguay in its international insertion strategy, links with India are crucial since it is one of the emerging powers with a growing influence in the global context; this is why it is so important to increase trade, both ways, because currently it is insignificant and negative for Uruguay.” – Vice President of Uruguay, Danilo Astori (link).
Chile’s economic prosperity has been largely fueled by its copper mines, and since India’s demand for copper is expected to rise rapidly over the next decade, Chile’s commodity-exporting future is looking bright. From MercoPress:
COCHILCO, Chile’s copper commission, estimates that by the end of this decade, India’s demand for copper will rise from the current figure of 610,000 tons to between 2.4 million and 3.6 million tons annually.
Due to broad economic growth, India’s increased demand for copper is set to move the nation from sixth place in world consumption of copper to second, just behind China, which accounts for 34% of global copper production, or about 7 million tons.
India is expected to overtake the United States, Germany, South Korea and Japan with this increased consumption –nations whose copper demand today is greater than India’s, but still far behind China’s.
This sharp increase in demand is expected to have an effect on world copper prices.
“With India playing a growing role in the market, the price of copper in the long term would rise about 10%, which is to say, by 20 cents more for each pound,” explained COCHILCO economist Erik Heimlich.
India’s growth rate is also expected to surpass China’s in the next few years, Heimlich said. As a result, Heimlich predicts, “India should change its production structure from services toward more copper-intensive areas”.
Such a shift will allow development of both greater internal consumption, and larger manufacturing production for export.
Heimlich added that copper refinery operators in India had already begun contacting COCHILCO about establishing long-term relationships with Chilean copper producers to supply their growing needs.
Copper production, the principal driving force behind Chile’s economic strength, has brought the country high profits in recent years.
Copper prices Tuesday reached US$4.01 per pound, the highest since June 2008. The rising prices are rapidly approaching the all-time high in June 2008 of US$4.07 per pound.
So far, the average copper price for 2010 is US$3.32 per pound, with a monthly average of US$3.87 per pound.
In 2011 Brazil is expected to surpass Italy to become the seventh largest economy in the world, and India is expected to move ahead of Spain. From MercoPress:
The research unit of The Economist is predicting that Brazil, the eighth largest economy of the world in 2009, with a nominal GDP of 1.5 trillion, followed by Spain, Canada, India and Russia, would continue in the same position during 2010.
However it is expected that in 2011 the largest Latin American economy will climb up to stand in seventh place in the ranking with a nominal GDP of just over 2 trillion. Thus, Brazil would regain the position it occupied in 1994 displacing Italy which it is not expected to reach 1.8 trillion in nominal output. Another European Economy that will surrender position among the largest economies in the world is Spain, being relegated to the 12th post because of the significant advance of Russia and India.
“If America had a central bank chief like Y. V. Reddy, the U.S. economy would not have been such a mess,” Joseph E. Stiglitz, the economist and Nobel laureate, has said. In India, there were no subprime loans.
“Savings are important. Joint families exist. When one son
moves out, the family helps them. So you don’t borrow so much from the
bank.”
Real Time Economics – WSJ
Why did China, India and Brazil all emerge so much more rapidly from the global financial crisis than advanced economies did? In a presentation in Denver to the National Association for Business Economics, Nobel Prize-winning economist Michael Spence, now of New York University, offered several reasons:
* These economies learned bitter lessons in the 1997-98 crisis that afflicted them more than advanced economies.
* They were in “a good initial position” with relatively low leverage, and thus didn’t get hit with the severe “balance sheet recession” that hit the U.S.
* They hadn’t any complex securitized financial instruments.
* They had built up large foreign-exchange reserves.
* Their central banks responded, much as advanced countries’ central banks did, with speed and agility to the credit tightening.
* Their economic managers displayed “a high degree of competence.”“Is this sustainable? Will they keep growing? I think the answer is a qualified yes,” he said. “I wouldn’t have said that 10 years ago.”
Adding to the sustainability of growth in emerging markets are two other
factors, he said: One, they are increasingly trading with each other
and thus are less dependent on now slow-growing advanced economies; two,
they have become rich enough for their consumers to buy the goods they
produce.
Another mountain range is making its debut as the backdrop for a song-and-dance sequence in an Indian movie—if it made the editor’s cut, that is: the Andes in Peru, and the ruins of the Inca city of Machu Picchu located high amid those mountains.
Strictly speaking, we’re talking Kollywood not Bollywood, even if the latter has become the catch-all term overseas for all movies coming out of India. “Endhiran” (Robot), in which Tamil megastar Rajnikanth plays a scientist and a robot and which opens Friday, flew its stars to Peru to film one of the music scenes.
Fernando Astete, director of the Machu Picchu Archaelogical Park, recalled the shoot approximately two years ago.
“We have seen some Indian movies here,” said Mr. Astete. “It was the quintessential music that we see in those movies, with the man falling in love and courting the woman. There were also some Brazilian elements all mixed in. It was something quite exotic.”
The anthropologist said it was quite unusual to get a film crew like this. “Normally we get films about the discovery of Machu Picchu, the Discovery Channel, what was Machu Picchu like, films by National Geographic, that kind of thing,” said Mr. Astete. “The idea was to promote Peru in the vast market of India,” he said. Mr. Astete said the agency that markets tourism to Peru, Promperu, helped the film’s crew with the paperwork in order to be able to film there.
As part of the inauguration of the International Fair of Bogota, Colombia’s president, Juan Manuel Santos, said that “Colombia has a clear horizon that makes you dream to prosperity.” The president said India’s participation in trade shows as a model of technological progress, economic and industry and said the approach opens up the possible signing of an FTA with that country.
India is participating for the first time at the show and does so with 151 companies, seeking to consolidate and expand trade relations with Colombia says 50 years ago.And the president of the Export Promotion Council of India, Chadha Aman, said the Colombian market as one of the most stable in Latin America and is appreciated for products like oil, coal, wood and petrochemicals, among others.
Colombia’s ambassador in New Delhi, Juan Alfredo Pinto, said that India is clearly an engineer[ing] power, with production aimed at high technology and product development, with high domestic consumption of vehicles.
He said that 70 percent of taxis circulating in Bogotá was manufactured in India
He also said that Colombia has currently 26 Indian companies.
According to a recent Bloomberg poll, Brazil is tied with China as the most preferred place to invest, and India follows close behind in third place.
From Bloomberg:
The U.S. has fallen behind emerging markets in Brazil, China and India as the preferred place to invest, a Bloomberg survey shows, though the world’s largest economy still ranks highest of all major developed countries.
The U.S. ranked first three months ago in the last quarterly Bloomberg Global Poll. Along with the slipping perceptions of the U.S. markets in the most recent survey, conducted Sept. 16-17, poll respondents say the Federal Reserve is likely to take further steps to try to bolster the economy.
According to the commerce ministry officials, India is looking forward to sign an FTA with Peru as the first step of engagement. It is also eyeing similar trade agreements with some other Latin American countries. “Latin America is a key bloc for us. So far our trade has been restricted to Brazil and Argentina but there are other key markets which we are exploring,” an official said.The government is looking forward to include newer Latin American countries in the focus market scheme (FMS) and announce tax breaks for Indian exporters. India is also expected to reduce import duties on a set of imports from Latin America. According to a report published by Inter-American Development Bank, agricultural exports from Latin America attract an import duty of 65% in India.
The initiative has been taken up by Jyotiraditya Scindia, minister of state for commerce. In an earlier interview with FE, Scindia had said that Latin America housed a set of developing economies which held a lot of potential of trade with India. “In our foreign trade policy (FTP) announcement, we have steadily shifted the focus to developing countries because it is from these areas that the growth will come,” Scindia said. Earlier this month Scindia led a delegation to Peru scouting opportunities for enhanced trade between the two countries.
For sure India needs more design thinking in products and services; with many engineers running the show, good design, sadly, is thought of an expense.
Nussbaum: | Co.Design
If you’re a business or an NGO with an operation in Asia or Latin America, where do you go when you want some serious local design thinking? You might start by calling my colleague and friend Carlos Teixeira, a Brazilian-born assistant professor at the School of Design Strategies, in Parsons The New School for Design. Carlos is speeding the transfer of design thinking expertise by building his own network called NODES.NODES connects Parsons to Idiom Design and Consulting, a key design thinking-based consultancy in India. Idiom founder Sonia Manchanda is a close friend of Carlos and recently helped launch SPREAD to spread the word of design thinking in her country. Here’s what the Idiom Web site says about it:“SPREAD was hence born as the design outreach program of Idiom. Since its induction three years ago SPREAD has successfully worked with various institutions and business houses conducting workshops, seminar programs and lectures to make design a weapon to transform and grow our economy and to better plan our lives and environment. SPREAD makes design thinking, tools and processes accessible to design and business students, practitioners and even school children.”
Today, along the NODES network, one can see the thinking between the Parsons design knowledge network lab and Idiom’s SPREAD project. As NODES expands to other consultancies and schools, Carlos expects increasing knowledge to flow South to South among consultancies in Asia, Latin America and Africa as well as between South to North.
Business is beginning to follow. European and U.S. corporations are increasingly using local innovation consultancies for their local business. And other emerging market countries are starting to hire consultancies schooled in design thinking. Idiom was recently hired by companies in Sri Lanka who have heard of its strategic design capabilities and Brazil-based Crama has new business in Angola for the same reason. Mexico-based Insitum has opened offices in the U.S., Brazil and Colombia, and works in Canada.
