Post-COVID: Indian Companies look towards three Central American nations for business opportunities

In the Healthcare & Hygiene Expo, which was organized with industry body FICCI, top 15 Indian companies including BPL, Dabur, Raymond UCO and Sri Sri Tattva had made their presentations.

Indian mission in Guatemala was perhaps the only mission in Central America which during the global lockdown organized six major virtual meetings and exhibitions showcasing various sectors of India.

“Indian business establishments should look at this region with a strategy to expand market share and not just look at this region as small countries with small populations. “Minimum population and Maximum business share” should be the approach. Our products offer good quality at affordable prices. With sustained efforts, we will be able to increase our market share in these countries and that will provide adequate returns on investments,” Indian envoy to Guatemala, El Salvador and Honduras, BS Mubarak, tells Financial Express Online.

Between June-September these virtual meetings and exhibitions gave insights to buyers from Guatemala, El Salvador and Honduras in sectors like Healthcare & Hygiene; Indian Textiles; Food, Agriculture and Agro; Technology, FMCG Supply Chain; and SRTEPC Textiles.

Why so many meetings during global lockdown?

Ambassador BS Mubarak, says, “The lockdown due to COVID-19, gave us an opportunity to use the virtual platform to showcase various sectors. Large companies from various sectors here in Guatemala, El Salvador and Honduras showed interests and through these virtual meetings concerns related to distance, language etc were addressed.”

In the Healthcare & Hygiene Expo, which was organized with industry body FICCI, top 15 Indian companies including BPL, Dabur, Raymond UCO and Sri Sri Tattva had made their presentations to more than 100 companies from three Central American countries. “The response we got was very encouraging and through such BSMs and meets virtually, one gets not only networking without stepping out but is also able to network with companies in these countries, with tangible business transactions,” the Indian envoy to Guatemala, El Salvador and Honduras said.

According to Ambassador Mubarak, “The first virtual meet the mission organized was early June and it was for showcasing Indian Textiles. In fact, Textiles is one of the major export items in the region. The purpose was to give an insight into how the Indian companies are ready to do business post-COVID.”

Around twelve sellers including Britannia, Axess Seven, Jabs International, Dabur, Patson Foods and Swastik Gum Industries had showcased their products to over 80 buyers from during the Food, Agriculture and Agro meet in August. “Guatemala is a green country and they are already exporting to India. India based Jabs International is one of the biggest importers of commodity from Guatemala. This is the best time for Indian companies to be part of the supply chain in the region,” the envoy adds.

In an exclusive virtual meet organized by FICCI for Central America, held in August the FMCG Supply Chain expo had the Guatemalan Minister of Economy, Tony Malouf, as the chief guest. “Around 15 companies from India and more than 100 companies from Guatemala, El Salvador and Honduras had participated in the event. There are opportunities for Indian companies for ready to eat products, allied products, packaging, agritech, diesel engines and other machines. The countries in the region prefer Indian machinery.”

Last month, major textile companies from India including Aditya Birla Group, Nagreeka Group, Rachna Art Prints, Raymond, Reliance Industries Limited and Rughani Brothers presented their textile products to 60 buyers from the three countries which fall under the India mission. The presentations were made during the Synthetic and Rayon Textile Export Promotion Council (SRTEPC) online expo.

“Preferential trade agreements with individual countries and or creating Joint Economic Commissions to sort out trade-related issues and issues related to tariff and non-tariff barriers would help the companies to increase the footprints of the Indian companies,” a top diplomat told Financial Express Online.

Issues that need to be addressed

There is also an urgent need to reduce the time of transit for goods that are being exported from India. Presently it takes approximately 70 days for containers from India to reach Central America and The Caribbean. This must be brought down by engaging all stakeholders including shipping and logistic companies. Countries from the Far East are able to deliver goods in 30 days.

To establish warehousing facility as this will offset the issues related to time taken for Indian goods to reach Central America and the Caribbean. This strategy of holding stock has really helped some companies expand their market. “Until we have a solution for fast transport of goods, warehousing the facility can help us tackle this issue.”

Expert View

Sharing her views on the emerging opportunities in Central America, Dr Aparaajita Pandey, Asst. Prof, Institute of Public Policy, Amity University, NOIDA, says, “As India finally has begun looking to the far west as a potential opportunity for growth in trade and investment, our trade relations with Latin America and the Caribbean are on an upswing. However, most of the trade, investments, and political focus revolves around the larger South American nations like Brazil, Argentina, Chile, in limited context even Venezuela and Mexico in the north. The inherent bias of being a larger country gives India a tunnel vision in a region that we have just started to explore for possible partnerships.”

“This prejudice is in no way unique to India as most international trade partnerships around the world tend to focus on the geographical position of the country, it’s historical and present political position, and most importantly the size of its economy. This along with perpetual ignorance about the region has led India to overlook the potential that Central America has for investment, trade, and trade agreements,” she opines.

According to Dr Pandey, PhD from Centre for Latin American Studies, JNU, “Central American countries, though much smaller in size than their South American neighbours and admittedly with lesser resources have for the past half a decade consistently registered a higher growth rate than other sub-regions of Latin America. The nations of the region, even those riddled with violence have seen not just a growth in GDP higher than the rest of the region; they have also managed to grow immensely in the services sector, the same sector that is steadily becoming a shining beacon of the Indian economic matrix. In addition to a burgeoning services sector, the Central American region is also witnessing a digital revolution and is increasingly adopting IT and It solutions, thereby, providing India with convenient investment opportunities.”

“Another feature of the Central American region is its unification under the Central American Integration System (SICA). Unlike their South American brethren, who have a spaghetti bowl of intertwining regional organisation, each claiming to be representative of all of South America and each failing at it spectacularly; Central American countries are grouped under the umbrella organisation of SICA. This makes it easier to not only establish politico-economic relations but also negotiate trade pacts and agreements with the entire region as a whole. This is something that India has been trying to effectively manage in South America with limited success. Central America has propped itself quite well on the opportunities pedestal, that India must explore,” Dr Pandey concludes.

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