Aztec nation overtook Brazil as the top destination for Indian exports to Latin America
India-Mexico relations have consistently been friendly, gracious, and affable. Their relations have been characterized by mutual understanding, developing bilateral trade and all-round cooperation. Both countries, with similar socio-economic development priorities and constraints, are labeled as large emerging economies in their respective regions.
India is a fundamental actor in the construction of democratic societies and an example of economic growth. Mexico is proud of its longstanding tradition as an ally of India and in the 21st century. In fact, Mexico was the first Latin American country to recognize the independence of India from the United Kingdom and established diplomatic relations with India as early as in 1950.
While India is one of the largest growing economies in Asia (right after China), Mexico today is a trillion dollar economy (ranked 11th largest in the world) and has an export market of approximately $400 billion USD per annum, according to the International Council on World Affairs. This creates room for healthy and prolonged economic dialogue between the two nations.
What does the commercial consist of?
Trade between the two nations has been steadily increasing at an average rate of 30% each year. However, the absolute numbers are still far below where they could be. It touched US$2.95B (Mexican figures) in 2008 – more or less balanced, before dipping in 2009 due to the global economic crisis. Since then, it has regained the momentum, touching $2.80B dollars in 2010, and climbing 49% to $3.26B dollars in the first ten months of 2011, according to government data.
Prime Minister Narendra Modi's visit in 2016 to Mexico resulted in increased political will in the bilateral relationship. According to figures published by TheWire, in 2016-17, India exported more to Mexico ($3.5B dollars) than to neighbors such as Thailand ($3.1B dollars), Myanmar ($1.7B dollars), and Iran ($2.4B dollars) or traditional trade partners like Russia ($1.9B dollars), and Canada ($2B dollars). Mexico's main exports to India include petroleum oil, telephone sets, instruments, and appliances used in medical, surgical, dental or veterinary sciences, sunflower seeds, cotton, fertilizers, and chemicals while India exports textiles, gems, jewellery, unwrought aluminium, weather, and software to Mexico.
Indian companies are progressively becoming aware of Mexico’s importance as an international growth market and a manufacturing hub. The three major components in the India-Mexico relationship are:
- Information Technology
The automobile industry is seemingly the most crucial in Indo-Mexican bilateral relations. Both countries are major manufacturers and exporters of automobiles. India grabs the sixth position for being the world’s largest producer of motor vehicles, being just a step ahead of Mexico in the seventh place. Most of India’s production supplies the large domestic car market, so it is not surprising that Mexico’s car exports at $32.84B far outweigh that of India ($5.39B), as data by Business Standard reveals. Significantly, for the second year in a row now, Mexico has been India’s largest export destination for cars. India exported more cars to Mexico than it did to the United Kingdom, Italy and Sri Lanka combined in 2015-16.
In addition, India and Mexico have teamed up through investments in the auto-components sector. Indian companies have 15 manufacturing and assembly plants in Mexico, from transmission-parts and tires to automotive lighting products and wiring harnesses. Mexican auto-parts companies have also set shops in Jamshedpur and Gurgaon, providing services to companies like Maruti Suzuki.
Another important sphere is the information technology industry. Ten Indian IT companies have offices in Mexico whereas Softtek, a Mexican based information technology company has its branch in Bangalore, Karnataka. Also around 60 Indian companies have offices in Mexico. Thirteen Mexican companies have invested over $800 million in Indian expansion.
Ever since the Donald Trump’s victory in the US presidential elections, the Mexican economy has been jeopardized by Trump’s policies towards Mexicans. According to The Dollar Business, Mexico depends on the US for 81% of its exports and nearly 50% of its imports. However, India's vibrant and diverse democratic culture has caught Mexico's attention. Mexico, in its current predicament, sees India as a new ally. Bilateral trade has increased substantially from $1.8B in 2006 to $6B in 2015 between both countries and Mexico overtook Brazil as the top destination for Indian exports to Latin America.
Latin American Post | Pankhury Harbansh
Copy edited by Marcela Peñaloza