India-Latin America trade

As Bolsonaro Comes to R-Day, Here’s How India and Brazil Can Cement Strategic Ties

Its high time Latin America and the Caribbean stop being a relatively blind spot in New Delhi’s calculus, given China’s initiatives in the region.

On January 26, Jair Bolsonaro will be the third Brazilian president to attend India’s 2020 Republic Day celebrations. Following the official announcement of his visit to New Delhi, expectations are once again on the rise for new cooperation agreements. Whether Bolsonaro and Indian Prime Minister Narendra Modi will fulfil these expectations remains to be seen.

Despite the signing of the Brazil-India strategic partnership in 2006, geographical distance and scarcity of social interactions have been major constraints hampering closer bilateral relations. While Brazil and India converge in their diplomatic agendas as southern emerging powers – expressed in the formation of IBSA, BRICS and G20 groups – it is imperative to realise the potential of their bilateral ties, which could become genuinely strategic over the next decade. Both countries have complementary interests and technical expertise that could be further explored in the fields of renewable energy (eg ethanol), nuclear, defence and space technologies.

Currently, there are two important signs that could lead to a new era in the relationship: First, Brazil is gradually realising the need to reorient its foreign policies towards Asia; and India is even more eager to improve relations with Latin America and the Caribbean (LAC), the last global frontier for its strategic footprint.

Second, current trends of US-China polarisation and geopolitical uncertainty are reducing the emerging powers’ room for manoeuvre, but the Indo-Brazilian relationship has little if any external constraint. On the contrary, Bolsonaro and Modi have shared conservative political ideologies which could further facilitate strategic cooperation.

Also read: Jair Bolsonaro and India’s New Circle of Friends

The Indo-Brazilian strategic convergence

Brazil and India are pioneers in South-South cooperation, converging in their high-level diplomatic agendas – from BRICS to multilateral institutions such as the UN Security Council and the WTO. Diplomatic synergy has fostered a positive environment for mutually enhancing Indo-Brazilian strategic outreach. For example, Brazil was instrumental in joining the Mercosur countries to sign a trade agreement with India, the first of its kind for the South American bloc.

BRICS leaders at the G20 summit in 2019. Photo: Reuters

Together, Brazil and India have expanded South-South cooperation in Africa, either independently or through the South African connection in IBSA and BRICS. The countries also have common interests in the maritime governance of the South Atlantic-Indian Ocean nexus, highlighted by the IBSAMAR biannual naval exercises.

Despite the mutual relevance of Brazil and India to each other, most initiatives were driven by multiple geometries, while the bilateral relationship was mostly guided by trade interests. Generally, Indian analysts view Latin America and the Caribbean (LAC) as a relatively blind spot in New Delhi’s calculus, especially when compared to China’s initiatives in the region.

The Indian approach to the LAC region is ripe for change. Since his first term, Narendra Modi has outreached to the regional countries, exploring the last frontier of India’s global strategic footprint. Besides being India’s largest LAC trading partner, Brazil is also the strongest regional market, with sizeable natural resources and strong expertise in strategic sectors such as oil extraction, nuclear and renewable energy, aerospace and defence industries. Recently, Indian concerns on energy and food security have driven its policies towards Brazil, especially in the case of biofuels like ethanol.

On the Brazilian side, there are increasing signs that the country needs to look East. Bolsonaro has struggled to formulate foreign policies beyond ideological alignment to the US. Due to diplomatic and economic concerns, Bolsonaro has reoriented his efforts towards improving relations with Asia. In October 2019, the Brazilian president embarked on his first Asian tour – visiting Japan, China and Gulf countries – and shortly after, hosted the 11th BRICS summit in Brasília. In order to improve intra-BRICS cooperation, Bolsonaro also confirmed plans for introducing visa-free entries to Chinese and Indian tourists and business persons visiting Brazil.

Also read: Bolsanaro, 2020 R-Day Chief Guest, Is Making Life Harder for India’s Sugarcane Farmers

The recent evolution of global geopolitics is also conducive for a closer relationship between Brazil and India. In a world of increasing polarisation between the US vis-à-vis China and Russia, the Indo-Brazilian partnership has relatively comfortable space to navigate without raising too many eyebrows from either side.

Currently, the conservative ideologies of Bolsonaro and Modi are drawing the two countries closer together, with tacit endorsement from Donald Trump’s administration. However, the consequences of their policies could be long-lasting for the aspirations of emerging democratic countries under the framework of south-south cooperation.

Brazil-India strategic partnership: A way forward

Following their bilateral meeting on the side-lines of the 11th BRICS summit, Bolsonaro and Modi have converged in establishing a solid framework for cooperation. During Bolsonaro’s visit to New Delhi later this month, Brazil and India are expected to sign new agreements through an ‘Action Plan’.

In a recent interview, the Brazilian ambassador to India André Aranha Corrêa do Lago proposed the way forward for bilateral cooperation. While traditional areas – renewable energy, agriculture and health – are set to expand, Lago expressed Brazil’s emerging interest in cooperating in strategic sectors, particularly defence and space. Both countries are also working to sign an agreement on cooperation and facilitation of investments.

Brazil and India should capitalise on this moment to extend cooperation in relevant areas with complementarity and potential to transform the relationship, such as nuclear, defence and space technologies. In 2016, for the first time, Brazil publicly supported India’s bid for membership in the Nuclear Suppliers Group, opening space for nuclear cooperation.

Brazil holds the third and sixth largest reserves of thorium and uranium in the world respectively but has mostly developed its research on Uranium, while India has more extensive research on applications of thorium. With regard to space technology, Brazil stands to gain from Indian technical cooperation. India is quickly becoming a global hub in manufacturing and launching satellites; Brazil and other LAC countries, in turn, have strongly relied on Chinese expertise and satellite launching vehicles.

Brazillian President Jair Bolsonaro and Indian Prime Minister Narendra Modi at the G20 Osaka summit. Photo: MEAIndia/India

In the defence sector, Brazil and India have rich and complex ecosystems with increasing participation of major private companies, such as Embraer and Tata. Following Bolsonaro’s visit, Brazil is expected to increase its international portfolio of sales and investments in India through the Make in India platform. Moreover, Brazil and India hold strategic technological and defence relationships with France, Israel and the US, opening several opportunities to jointly improve Indo-Brazilian defence manufacturing and research and development.

Also read: Latin America More Vital for Indian Exports Than Many Traditional Trading Partners

Final considerations

The relevant question is how to transform the Brazilian and Indian mindsets, breaking geographical and psychological barriers. There is a need to connect beyond high-level bureaucracies and business sectors, expanding initiatives at the academic and social spheres in order to increase public awareness. Interactions at all levels would raise domestic incentives for cooperation and reduce the mutual knowledge gap. Meanwhile, closer strategic coordination depends on the leadership’s ambition to take the leap.

Erik Herejk Ribeiro is an associate researcher at the Brazilian Centre for Strategy & International Relations (Nerint) and PhD in International Strategic Studies at the Federal University of Rio Grande do Sul (UFRGS), Brazil.

Latin America More Vital for Indian Exports Than Many Traditional Trading Partners

Even with longer shipping times and more expensive freight costs, Indian exports to Latin America outstrip what we ship to South East Asia and the Central Asian Republics.

As India expands its Act East policy and looks to take advantage of the US-China trade war, it’s easy to forget how important Latin America is as a trading zone for New Delhi.

For instance, in 2018-19, India exported more to distant Guatemala ($305 million, 15,000 km away) than to neighbouring Cambodia ($196 million, 3,400 km away).

India’s exports worth $181 million to the remote and small Uruguay (15,000 km away; population 3.4 million) is more than to Kazakhstan ($143 million) which is 1,600 km away from Delhi and has more than five times population at 18 million.

India exported more ($216 million) to Dominican Republic (DR) than to Uzbekistan ($201 million), even though the latter has double the population of the former.

In fact, even on a region-to-region comparison, India’s exports to Central America ($968 million) are more than what we ship to the Central Asian republics ($442 million), although the latter is far closer and has a bigger population.

India’s exports to Mexico ($3.84 billion) are more than our exports to Myanmar ($1.2 billion), Russia ($2.4 billion), Canada ($2.9 billion), Egypt ($2.9 billion) or Nigeria ($3 billion).

In fact, Mexico is the second largest destination for India’s vehicle exports, clocking in at $1.61 billion. This is more than our exports to neighbouring Bangladesh ($1146 million), Nepal ($738 million), and Sri Lanka ($473 million).

The above statistics should open the eyes of those who might think that Latin America is less important for India’s exports on the ground that the region is too far and less familiar.

Also read: From Coolies to Patrons and Partners: The Chinese Paradigm Shift in Latin America

Also, 2018-19 isn’t the first year that Latin American countries have overtaken India’s neighbours and our more traditional trading partners who are often seen as more important for India’s exports.

This trend has slowly been building up from 2010, when Indian exporters started exploring the Latin American market more seriously. Even with longer shipping times and more expensive freight costs, Indian goods have become competitive in Latin America.

Some brands such as Bajaj, Hero, Mahindra and Tata have become popular in the region. Indian motorcycles have become industry leaders, grabbing the largest market share in a few countries.

Colombian President Juan Manuel Santos, with Hero Motorcorp’s Pawan Munjal at the company’s facility in Villa Rica. Credit: Hero MotorCorp

The growing importance of Latin America to Indian companies is best illustrated by the success story of UPL. This Indian agrochemical firm has more business in Brazil ($1.2 billion) than in India.

Brazil accounts for 25% of UPL’s global business while Latin America as a whole accounts for 30% of the company’s total global revenue. The region’s share is more than that of Europe, the US or Asia.

Trade ties

According to the figures recently released by the ministry of commerce, India’s exports to Latin America increased by 9.6% in 2018-19 (April to March) reaching $13.16 billion from $12 billion in 2017-18.

Imports from the region went up by 5.3% to $25.73 billion from $24.44 billion in 2017-18. Total trade with the region has gone up by 6.7% to $38.89 billion from $36.45 billion last year.

In 2018-19, Mexico overtook Brazil as the top trading partner of India in Latin America for the first time.

Latin American Trade with India (Figures in millions of dollars)

Country	Exports	Imports	Total trade
Mexico	3841	5577	9418
Brazil	3800	4406	8206
Argentina	563	1955	2518
Colombia	1117	1055	2172
Chile	990	1238	2228
Peru	721	2405	3126
Venezuela	165	7259	7424
Ecuador	298	219	517
Bolivia	105	852	957
Uruguay	181	43	224
Paraguay	161	21	182
Guatemala	305	16	321
Panama	227	39	266
Honduras	167	18	185
Costa Rica	136	51	187
El Salvador	79	4	83
Nicaragua	54	4	58
Dominican Republic	216	567	783
Cuba	35	4	39

Total	13161	25733	38894

Strategic or not?

Latin America contributes to India’s strategic energy and food security by supplying 12% of India’s global imports of $117 billion dollars of crude and 22% of India’s vegetable oil.

The competition of Latin American crude and edible oil have put pressure on the monopoly suppliers of these items from the Middle East and South East Asia (Indonesia and Malaysia supply palm oil) to offer to India lower prices and better terms.

The suppliers of crude were: Venezuela ($7.25 billion), Mexico ($4.27 billion), Brazil ($1.6 billion), Colombia ($571 million), Ecuador ($128 million) and Argentina ($47 million).

The region has abundant reserves and the potential to meet India’s needs of lithium (for electric vehicles) and pulses in the long term.

India has started importing raw gold from Latin America in the last five years. Peru is the top supplier at $2.2 billion, followed by Bolivia at $849 million, Brazil at $541 million, Dominican Republic at $537 million and Colombia at $380 million. Direct imports from the region have helped India to cut costs by saving from the margins paid to gold sellers in Switzerland and UAE.

Venezuela continued as the main source of imports in the region with its crude oil supply. But this will go down drastically this year since India has been forced to stop import of Venezuelan oil by the US sanctions. But India can source more crude from other Latin American suppliers.

Figures in million US Dollars

Petroleum crude	14080
Gold	4556
Vegetable oil	2194
Copper	1364
Equipment and machinery	1054
Wood and pulp	454
Raw sugar	437
Chemicals	290
Iron and steel products	281
Fruits and vegetables	154
Plastic products	145

Future of the market

Latin America is a large market of 600 million people, with a combined GDP of $6 trillion.The region’s imports are around a trillion dollars.

The economies of the region are doing relatively well. The GDP of the region is projected to grow by a modest 1.3% in 2019 and continue its growth trajectory in the medium and long term. The average inflation and external indebtedness are in manageable figures. Democracy has become stronger in the region with more political stability.

The only exceptions, however, are Venezuela and Argentina.

Venezuela’s GDP is forecast to shrink by 10%. The country suffers from hyperinflation of several hundred thousand percent, devaluation of the currency by 99%, shortages of essential consumer items and energy shortage. The economic misery is compounded by the political crisis, break down of institutions and social instability. US sanctions have made the economic situation worse.

Also read: Why It’s Important for India to Trade With Latin America

Argentina’s GDP is expected to contract by 1.2% in 2019. Inflation is over 40% and the country has contracted a debt of $57 billion from IMF. The country is preparing for elections in October. It is hoped that 2020 will see recovery of the economy.

Brazil and Mexico, the two largest markets are set to grow in the coming years with the new Presidential terms starting from the beginning of 2019.

Moving forward

India’s exports can be increased to %25 billion dollars in the next five years if exporters, the export promotion councils, the government and the embassies coordinate with a plan of action seriously and systematically. India should take a leaf out of Beijing’s book, which has set a target of $500 billion in trade with Latin America by 2025, taking it up from their 2018 figures of $148 billion in exports and $157 billion in imports.

The commerce ministry should revive its ‘Focus LAC’ programme, which helped in the past in encouraging and supporting Indian exporters to explore the business opportunities in Latin America.

The Indian government should consider extending large Lines of Credit to support Indian exports. While China has given $150 billion dollars of credit to the region, India has given less than $300 million.

The Narendra Modi government should also open embassies in countries such as Ecuador, Bolivia, Paraguay and Dominican Republic.

This is a good time to accelerate the economic push into Latin America which has started attaching importance to India, the third largest export destination for the region’s exports after US and China.

Disenchanted with the protectionist US and Europe, and determined to reduce its over dependence on China, Latin Americans see India as a large and growing market as well as a benign economic partner for win-win in the long term.

R. Viswanathan is a Latin America expert and former ambassador to Latin American countries.

Why It’s Important for India to Trade With Latin America

Many believe that trading with Latin America is expensive and therefore should not be a priority. But statistics tell a different story.

India and Latin America have had many summits to pen bilateral agreements and ease trade. File photo from the CII India-Latin America and Caribbean Conclave, December 2013. Credit: Ministry of External Affairs

For those who think that Latin America is too far and the cost of freight too high, and therefore that the region should be less important for India’s trade, here is an eye opener from the 2016-17 (April-March) statistics of the commerce ministry of India.

In 2016-17, India exported more to Mexico ($3.5 billion) than to neighbours such as Thailand ($3.1 billion), Myanmar ($1.7 billion) and Iran ($2.4 billion) or traditional trade partners Russia ($1.9 billion) and Canada ($2 billion).
India’s exports to Colombia ($787 million) were more than the exports to some West European countries such as Austria, Ireland and Scandinavian countries.
Guatemala imported more from India ($243 million) than some Central Asian and East European countries.
India’s trade with the Dominican Republic ($900 million) was more than the trade with Portugal, Greece and some other European countries.

For those who think that it is very difficult for India to compete with Chinese exports, here is another piece of information:

India beat China in export of pharmaceuticals to Latin America. India’s exports were $651 million in comparison to China’s $404 million in 2016. In fact, in the last five years, India has been exporting more pharma to Latin America than China. What is even more interesting is the fact that India imports a bulk of its raw materials from China, converts them into finished formulations and exports them.

Trade in 2016-17

India’s trade with Latin America in 2016-17 was $30 billion, of which export was $10.4 billion and imports $19.6 billion. The trade has gone up slightly from $29.7 billion in 2015-16 but is down from $43 billion in 2014-15. The main reasons for the decrease in trade are the fall in commodity prices imported by India from Latin America and the recession of the region in 2015 and 2016. India’s import of crude oil from the region fell to $9.5 billion in 2016-17 from $20 billion in 2014-15, thanks to the decrease in oil prices from over $100 dollars to less $50. The volume of crude imports had, in fact, increased.

	2016-17	2015-16	2014-15
India’s exports	10.4	10	13.7
India’s imports	19.6	19.7	29.3
Total	30	29.7	43

India’s trade in 2016-17:

Country	Exports	Imports	Total Trade
Brazil	2,408	4,115	6,523
Argentina	512	2,500	3,012
Uruguay	189	13	202
Paraguay	125	155	280
Venezuela	62	5,512	5,574
Mexico	3,473	2,944	6,417
Colombia	787	594	1,381
Peru	699	1,077	1,776
Chile	676	1,226	1,902
Ecuador	199	356	555
Bolivia	80	174	254
Guatemala	243	22	265
Costa Rica	160	59	219
Honduras	136	22	158
Nicaragua	87	3	90
El Salvador	60	6	66
Panama	222	202	424
Dominican Republic	225	675	900
Cuba	42	1	43
Total	10,485	19,656	30,041

(All figures in the table are in million $)

In 2016-17, Brazil was the largest trading partner at $6.5 billion, followed by Mexico ($6.4 billion), Venezuela ($5.6 billion), Argentina ($3 billion), Chile ($1.9 billion), Peru ($1.8 billion), Colombia ($1.4 billion) and the Dominican Republic ($900 million).

Latin American flags. Credit: Reuters

India’s exports

Mexico was the largest destination of India’s export, valued at $3.5 billion, followed by Brazil ($2.4 billion), Colombia ($787 million), Peru ($699 million), Chile ($676 million) and Argentina ($512 million). Export to Mexico has increased by 21% from last year, while it declined in the case of the other large markets such as Brazil, Argentina, Colombia, Peru and Chile.

Value of major exports of India, in million $:

Vehicles	3,408
Equipment and machinery	861
Organic chemicals	810
Pharmaceuticals	651
Iron and steel	623
Chemical products	566
Synthetic fibres	550
Apparels	442
Plastic items	350
Aluminium articles	207
Diesel	105

Latin America was the leading destination of India’s vehicle exports with a share of 23% of India’s global exports. Mexico continued to be the main buyer of Indian cars with $1.6 billion accounting for 25% of India’s global exports. Vehicle exports to Mexico have been steadily increasing in the last three years and the increase from last year was an impressive 39%. Colombia, which was the number one buyer of Indian motorcycles came down to the third rank in 2016-17 with imports of $185 million, after Bangladesh and Sri Lanka. In 2016-17 Latin America imported motorcycles worth $354 million from India in 2016-17, which was 25% of India’s exports to the world.

Imports

Major sources of imports were: Venezuela ($5.5 billion), Brazil ($4.1 billion), Mexico ($2.9 billion), Argentina ($2.5 billion), Chile ($1.2 billion), Peru ($1 billion), Dominican Republic ($675 million) and Colombia ($594 million).

The main imports were crude oil ($9.5 billion), vegetable oil ($2.9 billion), gold and precious stones ($1.7 billion), copper ($1.7 billion), raw sugar ($1 billion) and wood ($309 million). The revenue through sugar imports is generated by mainly by refining and re-exporting to other countries.

The imports are set to increase given the growing demand for these items in India, driven by the increasing population and consumption as well as the high economic growth rate.

Outlook for 2017-18

This trade should go up next year, with the recovery of the economies of the region in 2017. The GDP of Latin America had shrunk by 1.1% in 2015 and 0.5% in 2016. The GDP is expected to grow by 1.1% in 2017, helped by the recovery of global commodity prices. Except Venezuela, all the countries of the region have shown positive GDP growth. Even Brazil, which continues to suffer from political crisis, has turned around with positive growth this year.

Latin America will continue to contribute to India’s energy security with the supply of crude oil. The region has large reserves and the capacity to increase production and exports to meet the increasing crude imports from India. South America has started supplying pulses, which India has been importing more and more with the growing gap between consumption and domestic production.

The collapse of the Trans Pacific Partnership following the withdrawal of the US is good for India. The TPP had extra clauses for patent protection, going beyond the WTO standards, and this would have affected India’s generic medicine exports to Latin America.

The expanded Preferential Trade Agreement signed by Chile and India in 2016 has come into force from May 2017. Peru and India have agreed to start negotiations for a free/preferential trade agreement and this should also help in boosting the trade with the region.

Indian exporters should focus on the markets in the Pacific Alliance (Mexico, Colombia, Peru and Chile) whose economies are growing more and whose trade policies are more stable, transparent and predictable, with the least protectionism.

Latin Americans have started paying more attention to India, especially after arrogant and insulting remarks from Donald Trump against Mexicans and his protectionist trade policies. They also want to reduce the over-dependence on China, which has used its dominance to hurt the region’s industries and given rise to other risks. They attach importance to India, which has overtaken China in terms of GDP growth rate, and see India as a non-threatening trade partner in the long term.

India’s exports could be doubled to $20 billion in the next five years if exporters target Latin America more seriously and systematically.

Ambassador (retired) R. Viswanathan is a Latin America expert.

The World Is Looking For Affordable Drugs – and India Needs to Keep Delivering

The export of generic pharmaceuticals is one of India’s strengths. But both the government and manufacturers need to do more if they want to continue to stay ahead of China.

India’s global export of pharmaceuticals is double that of China. Credit: Pixabay

In 2016, India exported $651 million worth of pharmaceutical products to Latin America, as compared to China’s $404 million-worth pharma exports. In fact, India has consistently beaten China in the last five years in pharma exports to Latin America. What makes this even more interesting is that India imports the bulk of its raw materials from China, converts them into finished products and exports them.

Making a name in Latin America

India exports affordable generic drugs to the region, in contrast to the costly, patented products supplied by MNCs. This has led Latin American governments and people to have a positive view of India as an important contributor to their objective to reduce the cost of healthcare. In fact, Brazil and Chile encouraged the entry of Indian pharma companies into their countries to put pressure on MNCs and local drug-makers to increase the availability of generics and reduce the cost of medicines.

India is also a major supplier of bulk drugs (pharmaceutical raw materials known as API) to Latin American manufacturers of pharma products. The export of bulk drugs are worth over $300 million. This helps Latin American manufacturers reduce their cost of production, thanks to the low-cost inputs from India. Indian pharmaceuticals are not considered a threat to the Latin American industry, which has been hurt badly by the large-scale entry of Chinese manufactured products in many sectors.

Some Indian pharma companies have even set up manufacturing plants in Brazil, Mexico and Argentina. Besides supplying to the local markets, these units also export to the US and other countries outside the region. The Glenmark plant in Buenos Aires has become the company’s global hub for the manufacture and export of oncological products to over 20 countries, including the US.

The success and positive perception of Indian pharmaceuticals have helped in enhancing the image of other Indian companies, as well as India as a whole, in Latin America. Latin American trust in Indian medicines has helped in increasing their confidence in the quality of other Indian products as well.

But India’s pharma lead over China is not just limited to Latin America. In fact, India’s global export of pharmaceuticals is double that of China. In 2016, India’s pharma exports were worth $13 billion, as against Chinese exports worth $7 billion. India is the tenth largest pharma exporter in the world, while China ranks at 16.

Other importers

India is the fourth largest supplier of pharma to the US, with exports worth $5.1 billion, while Chinese exports to US were just $1.1 billion in 2016. Indian companies account for 30% of the US’s generic drug imports. It is also creditable that India has the largest number (over 200) of US FDA-approved pharma units outside the US. Some Indian firms such as Sun Pharmaceuticals, Lupin, Reddy Labs and Cipla have also established manufacturing units in the US.

India leads China in exports to the EU as well. In 2016, India’s exports were worth $1.56 billion as against China’s $1.36 billion. Even in Africa, where the Chinese have spoiled the market with massive credit and some non-transparent practices, India’s pharma exports were worth $2.8 billion as against China’s $618 million in 2016.

The UK is the second largest market for Indian pharma exports, which stood at $464 million in 2016. India also exported to other developed markets in 2016, including Australia ($220 million), Germany ($161 million), France ($145 million), Netherlands ($143 million), Canada ($143 million) and Belgium ($125 million).

India exports half of its total production of pharmaceuticals. Exports to the US and other rigorously-regulated western markets account for over 50% of India’s global exports. This has given a stamp of quality to Indian pharmaceuticals, adding to the confidence in Indian medicines in Latin American and the rest of the developing world.

India is the largest exporter of generics (by volume) in the world, accounting for 20% of global export volume. The low cost of production and the large and strong base of scientific and technical human resources have given Indian exporters of generic medicines a competitive advantage. The world has recognised India’s role as the main contributor to the lowering of healthcare costs in developed countries like the US and the UK. Western NGOs was well as foundations such as the Bill and Melinda Gates Foundation, Doctors Without Borders and the Clinton Foundation buy Indian generics for use in their healthcare work in Africa.

The way forward

There are, of course, many challenges that Indian pharma exports face. Some Indian companies, including Ranbaxy, have been caught and fined or their products banned by the US FDA and its EU counterpart for violations of quality standards and authenticity of data. There is a shortage of qualified pharmaceutical scientists for research and development work. While the exports are dominated by a few large players, there are many small and medium companies that need technological and infrastructural support. There is a need to strengthen the Indian regulatory system and train people for the industry in collaboration with educational institutions. Indian companies have profited from mass producing those products whose patents have expired. But they need to move beyond this business model and become innovative, with more investment in research. The government of India should also keep up its solid stand against pressures from the US to change Indian patent laws.

Pharmaceuticals are not a focus area for China; it is its 39th largest export item. But China has started catching up fast. For India, pharma is of greater importance, as its fifth-largest export item. Given this significance and the competitive advantage that India has, it is time for the government to specially focus on pharma exports, just as it has successfully done for IT. The government and the Indian pharmaceutical industry should work out a comprehensive strategic policy to increase exports in the future. According to a June 2016 study by Assocham, India’s pharma exports could reach $20 billion by 2020.

While the large exports of IT products and services, and diamonds are facing a downturn due to unfavourable global trends, the exports of generic medicines offers a brighter future in both the short and long term. The developed and developing world are concerned about the high costs of patented medicines and what this means for healthcare. Countries are keen to use more generics to cut down the cost of healthcare. This is an unmissable opportunity for India.

The success of pharma exports should be an inspiration for Indian exporters of other manufactured products who complain about and suffer from Chinese competition.

Ambassador (retired) R. Viswanathan is a Latin America expert.