BRAZIL AND INDIA STRENGTHEN COMMERCIAL RELATIONS

Brazil Now - March-April 2002
The Brazilian Trade Magazine

Ernst Weber

"Among the world's main emerging economies, the two countries unite forces to intensify bilateral operations, which turned over some US$ 828 million in 2001-a growth of 70% over the previous year"

The arrival of the Brazilian Trade Mission to India, led by the Minister of Development, Industry and Foreign Trade, Sérgio Amaral, reveals Brazil's eagerness to boost the already vigorous expansion of bilateral commercial relations over the last few years. To this end, the two countries are promoting actions to identify similarities, explore common opportunities and support the operations of their respective companies on this new business front.

This initiative is viewed with enthusiasm by businesspeople comprising the mission, such as the president of the Brazilian Vegetable Oil Industries Association (Abiove) and the president of the Bunge Group's Brazilian subsidiary, Carlo Lovatelli.

The potential business between the two countries is truly promising. Bilateral trade, which turned over an average US$ 200 million annually in the mid-1990s, stood at US$ 488.706 million in 2000 and grew nothing less than 70% one year later, totaling US$ 828.072 million.

"The potential for business between Brazil and India is enormous," says Lovatelli, who just returned from a trip to the latter in February, after participating in an annual meeting promoted by the International Association of Seed Crushers in Bombay and New Delhi.

"There is no doubt that agreements to create economic blocs, such as the Free Trade Area of the Americas (FTAA), are of great importance, but Brazil is on the right path in giving incentive to bilateral initiatives, such as the negotiations underway with India," defends the president of Abiove.

Considered one of the priority markets by the Ministry of Industry, Development and Foreign Trade, alongside China, the United States, Japan, the United Kingdom, Germany, Mexico and more recently Russia, India represents not only a large opportunity for business, but also detains technology, products and services that interest Brazil.

In Brazilian exporters' point of view, one of the most promising sectors is agribusiness, particularly the soybean complex, sugar and meats segments. "Despite the investments that have been made and the measures taken to increase its soybean crushing and refining park, India has been increasing its soybean oil imports from Brazil. In 1997, we sold a mere US$ 23 million of the product; last year, Brazilian soybean oil exports surpassed US$ 401 million," said Lovatelli.

In fact, the foodstuff segment is one of the ten sectors in which Brazil is concentrating its efforts to boost exports. The other segments include fruits, specialty coffees and cachaça (Brazilian sugar cane distilled beverage), meats, footwear and leather, furniture, textiles and apparel, cosmetics, ceramics, auto parts, machinery and tourism.

Another sector having enormous potential is air and land transport. The first area is already being tackled by Empresa Brasileira de Aeronáutica (Embraer). The world's fourth-largest aircraft manufacturer, the company is outlining its strategy to land in the Indian market, seeking out contracts for its commercial airplane and defense jet models.

In the land transport area, car manufacturers and engineering companies installed in Brazil detain cutting-edge technology and services to revitalize the transportation system in India, which intends to invest in highways and the renewal of its bus fleet.

Naturally, the opportunities do not only involve Brazilian exporters. Indian businesspeople have been increasing their operations in Brazil through trade fairs, exhibitions and trade missions that have systematically ventured to the country.

In fact, the last Indian trade mission came to São Paulo in September last year, with the organization of Expo-India 2001. Over 240 Indian companies participated in the event, reinforcing their presence in Brazil. Last year, exports from India totaled US$ 270 million and there is more room for growth.

Currently, Indian exports to Brazil include diesel oil-a petroleum derivative relatively new on the list, but already at the top of Brazilian imports-, chemical and pharmaceutical products, machinery, electrical and electronic components, plastic and rubber articles, dyes, cotton threads, textiles and leather.

"The list of products and services that are negotiated between the two countries can be increased considerably," affirms Roberto Nóbrega, vice president of the Brazil-India Business Council (CEBI), an entity headquartered in Rio de Janeiro that integrates companies from both countries. These firms mainly operate in the segments of production and development of software, chemical products and medicines.

"The Brazilian trade mission is one of the most important initiatives because it strengthens the drive to rekindle business between the two countries after a long period of stagnation," explained Nóbrega, who maintains contact with Indian businesspeople since 1984 when he was director of COBEC, the extinct trading arm of federally-owned Banco do Brasil. "We have a broad array of affinities and many points in common. This effort to bring the two country's together is on the right path to promoting mutual growth," added Nóbrega.

And if there is still much to be done regarding bilateral trade, the advances are even more tangible in scientific, technological and services cooperation. Bilateral exchange has increased considerably in the medicines sector, with Indian pharmaceutical laboratories-big exporters of generic medication around the globe-forming joint ventures or installing factories to operate in Brazil.

The pioneers in this area were the laboratories Reddy and Ranbaxy (producer of Lamivudina, a generic medicine used in the anti-Aids cocktail), which launched their joint ventures in São Paulo in 1998 and 1999, respectively. Aurobindo, Strides Arcolab, Zeus (Core Health Care/Claris Lifesciences) and Torrent followed suit after an official visit of Brazilian Minister of Health, José Serra, to India in July 2000. And there are various other Indian laboratories that are scouting the country to form associations or install representation.

Since 1990, the economy of India-a country having over 1 billion inhabitants-has grown more than 5% per year and the supply of electric energy to back the expansion of production represents another mutual business opportunity. India-based Tata Consulting Engineers, for example, has formed a joint venture with Enerconsult S/A-a Brazilian energy project consulting firm-to supply services for power sector undertakings.

In addition to electric energy generation and distribution, India has particular interest in Brazilian technology for the production of anhydrous alcohol. Brazil has ample know-how and experience in the production of this alternative fuel through the Próalcool program, which resulted in the largest fuel-alcohol producing park in the world.

Another promising opportunity is reserved for the computer technology area. India is the world's second most important country regarding computer technology, following the United States, with some US$ 5.7 billion in software exports in 2000.

In the 1990's, the country created a program to broaden the education of engineers, which was led by the city of Bangalore, in the southern state of Kamataka. In 1998, the 70 schools of that state had already educated 20,000 engineers per year, added to another 50,000 graduates in the remaining schools of the country.

In a first step toward bilateral cooperation in the Computer Technology area and following its example in China, Brazil's Light Infocon, headquartered in Campina Grande, Paraíba state, recently closed its first agreement with Online Productivity Solutions Pvt. Ltd. from Goa to jointly produce software. In the first phase, cooperation will involve "localization", or the translation and adaptation of products to a determined market.

Online will be responsible for the co-development, documentation and technical assistance on an international scale via the Internet using Light Infocon's LightBase for Windows software as a development platform for some of its applications and joint solutions. In addition, the company will distribute LightBase for Windows in India and other regional markets.

Other similar opportunities are being surveyed on other fronts, such as chemical products, precious stones, apparel and other areas. And as a result of this approximation, the two emerging economies are adding dynamism to their respective domestic markets, opening new doors to foreign trade and equally important, gaining more political clout in the international relations scenario.

News Index

Home | Company | Products | News