Business, Finance & Economics

Indian Samba: India offers more than China for Latin America


The Queen of the Drums of Uniao da Ilha samba school, Bruna Brum (R), performs with revelers at the Sambadrome on March 7, 2011 during the second night of carnival parade in Rio de Janeiro, Brazil.



China has a head start over India in Latin America, just like in Africa and virtually everyplace else.  But India may have more to offer, Tim Padgett argues in his Time magazine blog.

As U.S. engagement in Latin America wanes, China's keeps growing: its bilateral trade from Tijuana to Tierra del Fuego has soared 18-fold since 2000 to $166 billion in 2010, and in 2009 it became Brazil's largest commercial partner. According to the U.N., China's investment in Latin America topped $15 billion last year. But while that has helped fuel a Latin American boom, it's no secret that what Beijing wants most is commodities – almost all its imports from the region are raw materials like oil, copper and soybeans, and its investments almost always involve those products or the infrastructure to ship them – and what it seems to want least is to buy from or invest in Latin America's more important manufacturing sectors.

That's less the case with New Delhi. Granted, India and its 1 billion people crave Latin America's food and fuel as well. But its companies – which, not coincidentally, are largely of the private sector as opposed to China's, which are largely state firms – appear as interested in building enterprises in the region as they are in merely extracting minerals. Although India's bilateral trade with Latin America was seven times less than China's in 2010 at $23 billion, it still represents a ten-fold increase from 2000 and involves not just commodities but manufactured goods like regional jets from Brazil's Embraer S.A.

Of course, there's a parallel here in the race for influence in Africa, where China is often criticized for importing managers and workers, while India is seen as acting more like a local player.  But in the wake of India's more aggressive moves in Vietnam and Burma -- which make it seem as though New Delhi is finally put some muscle behind its long-standing Look East policy -- the most interesting aspect of India's attractiveness to countries in Latin America may be what it says about China.

As Padgett puts it:

Increasing frictions with China are a big reason for the region's increasing interest in dealing with India. That's particularly true of countries like Brazil, the region's largest economy and a fellow BRIC (Brazil-Russia-India-China) emerging power. In recent years Brasília has grown frustrated (as have many other countries, like the U.S.) with China's policy of keeping its currency, the yuan, undervalued – a stratagem that has allowed Beijing to pour its manufactured goods into Brazil and Latin America and handicap the region's own value-added sectors.

In that context, it's no coincidence that Indian Prime Minister Manmohan Sngh is in South Africa this week for the fifth IBSA (India, Brazil and South Africa) Summit.  Though in the past criticized as a talking shop, IBSA takes on an interesting political dimension following the attempts last year to make the BRICS (the old Brazil-Russia-India-China grouping, plus South Africa) into a venue for hashing out political positions as well as shorthand for an investment portfolio. Knocking Russia and -- perhaps more significantly -- China out of the mix, IBSA groups all the (legit) democracies of the economic bloc together, in a year that they all hold temporary seats on the UN Security Council.  One example how it might play out: according to the Times of India, Singh will try to get Brazil and South Africa to back his position on a resolution to the AfPak conflict, where China and India have competing interests.