TRADE COMPLEMENTARITY BETWEEN INDIA AND LATIN AMERICA
Dr. Rohita Deshprabhu Kamat
In 1997, the Government of India announced an Action Plan, the Focus LAC, with the express motive of revitalizing India-Latin America trade and economic relations. This venture enhanced the trade relationships between the two countries. Hundreds of companies from India invested approximately US 12 billion dollars in Latin America in various fields pertaining to agriculture, automobiles, cosmetics, energy, mining, etc. On the other hand Latin American countries too reciprocated by investment of approximately US one billion dollars in automobile parts, electronics, multiplexes, steel, etc. India has signed Preferential Trade Agreements (PTAs) with some of the larger countries of the Latin American region like Colombia, Chile, Brazil and Venezuela. Also, in the offing is the constitution of Joint Working Groups to further explore bilateral mechanisms for enhanced economic and trade linkages with Mexico, Brazil and Colombia.
The present study identifies the complementary sectors and commodities which have been focused on the India – MERCOSUR PTA (Preferential Trade Agreement) i.e. trade between Latin America and India. Trade Intensity Index enables the assessment of the trade value in a bilateral context of the two countries with regards to the value of the trade whether increased or decreased. The study used the Intra-Regional Trade Intensity Index developed by Kawai (2004), to explain the significance of intra-regional trade of a RTA to the Global trade. If the index shows more than one then it is indicative of a healthy flourishing trade. The study is based on export and import data on 17 sectors and the entire data are sourced from International Trade Statistics and cover a period from 1995 to 2013. The Product level RCA indices have been calculated for 255 commodities/products using the data provided by UNCTAD using the statistical database of the Harmonised system (HS – 1996) classification for the year 2013.
Keywords: India, Latin America, MERCOSUR, RCAI, Trade