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Indians to las Indias

20 May 2007

Add into the mix of Indians in Mexico… Indians.

From Delhi News Agency:


NEW DELHI: India and Mexico are all set to sign a bilateral investment protection agreement (BIPA) on Monday that will enable India Inc to access North American Free Trade Agreement (NAFTA)- a trading block comprising of Mexico, the US and Canada.

The agreement, for which the Union Cabinet gave its approval on May 18, is expected to be signed by Finance Minister P Chidambaram and the visiting Mexican Finance Minister M Eduardo Sojo Garza-Aldape, sources said.

Mexico, being part of Nafta and having a large number of important partners including the EU, offers good opportunity to Indian companies and enhanced market access through investments and joint ventures, said an official source.

NAFTA, created in 1994, has become a powerful trade body with strong trading relations with European, African and Latin American markets.

Over the years, India has maintained good relations with Mexico. Bilateral trade between the two countries has increased to USD 1.5 billion from USD 251 million in 1999.

Among others, Indian exports to Mexico are engineering goods, chemicals and pharmaceuticals, gems and jewellery, and textiles, while Mexican exports to India are dominated by crude and petrochemicals.

Mexico’s Gross Domestic Product (GDP) is estimated at USD 768 billion and per capita is around USD 8,000.

Investors of Indian origin have pumped in over USD 1.6 billion over 60 business ventures in Mexico, apart from recent joint ventures in pharmaceuticals and IT sectors by Indian companies.

This looks like a win-win. The Mexican economy is still dependent on that one huge northern market. And can’t compete on labor. The U.S. and Canada continue to prefer doing business with the People’s Republic of China, with it’s non-existent labor laws and “captive” work force. And, for political reasons, the U.S. is trying everything it can to make it difficult to use Mexican labor in their own country.

In agriculture, the hugely subsidized corporate exports from the U.S. and genetically modified crops from the U.S. have both been contentious. To the shock of U.S. agricultural negotiators, Mexico signed an agreement with Pakistan, which wasn’t on anyone’s radar.

I hadn’t heard before this about an Indian deal, but it makes sense. India has become a major supplier of off-shore services to the U.S. and Canada, but hasn’t been doing much in the way of goods. Coming in through Mexico, like the Chinese goods come in through the U.S., will give them the NAFTA market.

And, there has always been some Mexico-India trade (not a lot but some — where do you think the Indians got their chilies from anyway?).

Both have a middle-class without the money to spend on the accouterments who want and need goods that aren’t quite the same as those sold in the richer countries. I can see a good market for things other than Mexican petrochemicals ahead, or in Mexico, for Indian built goods.

India has the advantage of being an English-speaking community, but until now has not been able to sell in the largest and richest English speaking market. By working through Mexico, it will have access.

India and Mexico are both highly dependent on remittances, and here, I think is the real advantage. The Indians have turned the “brain drain” to their advantage, sending abroad doctors and engineers, or offering the services of well-educated people at home. Everyone knows about the Indian telephone services. Mexico, being Spanish-speaking really can’t compete for telemarketing (though it is the preferred location for Spanish-speaking markets, their only competitor being Argentina, and no one like Argentine accents). However, Mexican accountants and data crunchers and programmers have no need to use English particularly, and learning to use well-educated emigres… or invest in “off-shore” services could be a valuable new industry for the Mexicans.

One Comment leave one →
  1. 14 May 2008 6:52 am

    Mexico and India can be good friends….

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