• by Fabiana Frayssinet (rio de janeiro)
• Friday, March 11, 2011
• Inter Press Service

Companies from Brazil and India -- whose bilateral trade flow rose nearly threefold in the last three years -- are starting to diversify and complement their business dealings in order to strengthen the two emerging powers' economic presence in the world, in a kind of new two-way 'route to the Indies'.

'This partnership has been growing since the route to the Indies was rediscovered,' Roberto Paranhos, president of the India Brazil Chamber of Commerce, told IPS, referring to the growing trade between the two countries, which rose from three billion dollars a year in 2007 to 7.8 billion dollars in 2010.

Paranhos said the strongest business ties are currently in the areas of agribusiness and the pharmaceutical and computer industries, while there are great expectations regarding opportunities in the exploration of Brazil's deepwater oil fields in the Atlantic ocean.

Brazil's huge oil deposits, discovered at depths of 7,000 metres in what is known as the 'pre-salt' area, below a 2,000-metre thick salt layer under rock, sand and deep water, could be the fifth largest oil reserves in the world.

Companies from India are also interested in business opportunities in infrastructure and logistics ahead of the 2014 World Cup football tournament and the 2016 Olympic Games, both of which are to be hosted by Brazil.

'As the seventh largest economy in the world, we want to grow in strength and not be mere exporters of commodities but partners that play a transformative role' in areas like investment, technology transfer, marketing agreements and joint logistics in other regions, Paranhos said.

To explore these possibilities, the Confederation of Indian Industry (CII), the Indian Embassy in Brazil and India's Ministry of Commerce and Industry organised the India Show, which opened Friday, Mar. 11 in São Paulo and runs through Monday, Mar. 14.

The CII has held these trade fairs to promote 'Brand India' and Indian industry overseas, especially in developing and emerging markets with demand for Indian products and technologies, since 1995.

India projects an outlay of one trillion dollars in investment over the next five years.

With enormous complementarities and similar socioeconomic situations, there is huge potential for partnerships in the medium to long term, said B.S. Prakash, India's ambassador to Brazil.

By cooperating and working together, 'we can effectively become international players,' he said.

Seventy companies from the world's second-most populous country are taking part in the India Show, the first to be held in Latin America.

The trade fair is also aimed at facilitating technology transfer, marketing agreements and personal contacts and networking among industries, financial institutions and governments.

To judge by the first day of the India Show, the interest of Indian businesses in Brazil is concentrated in the automotive industry, textiles, agriculture, mining, export-oriented agribusiness, pharmaceutical products, computers and oil.

Rogério Hamam, the organiser of the fair, expressed surprise at the level of interest shown by Brazil's business community in an event held on the post-carnival weekend. At least 510 local firms showed an interest in doing business with companies from India.

'These are two countries in the same development category, both belong to the BRIC (the bloc made up of Brazil, Russia, India and China), and we have common interests and similar negotiating styles,' Hamam said.

The present economic uncertainty in the United States and Europe, including high unemployment rates and financial turmoil, points to a profound transformation of the global economy, said Paranhos, and highlights the need to seek out new options.

'For the first time, emerging markets have received more investment than the rich countries,' he said. 'Brazil for example surpassed even China in the rate of growth of foreign direct investment, which is set to grow 10 percent this year in India.'

But Paranhos stressed that the interest in new business partnerships with India and other new allies does not mean traditional markets like the United States and Europe are being excluded.

To illustrate, the business leader mentioned alternative fuels like ethanol. Companies from India have already purchased plants in Brazil, thanks to which they can work together to sell to other regions, he explained.

Partnerships in the oil industry between entrepreneurs and businesses from both countries are also encouraging, he said.

Bilateral trade in the oil industry totalled 2.5 billion dollars in 2010. From January to October 2010, India sold Brazil 1.5 billion dollars worth of diesel fuel, 41 percent of Brazil's total imports from that country, according to the India Brazil Chamber of Commerce.

India, meanwhile, purchased 900 million dollars in oil from Brazil, 32 percent of India's total exports to this country.

Three giants from India's oil industry are taking part in India Show: Bharat Petroleum, Hindustan Petroleum and Oil India.

'India has enormous potential' in the area of energy, because it imports 80 percent of what it consumes, while it is highly competitive in the field of oil industry engineering, Paranhos noted.

That potential could be especially useful in operations by Brazil's state-run Petrobrás oil company for explorations of the pre-salt oil deposits.

'Petrobrás already has Indian suppliers of sophisticated equipment,' said Paranhos, adding that Brazilian companies can partner with them to improve their capacities and know-how.

Other business opportunities lie in aviation and the pharmaceutical industry, where India has invested in Brazil, and in textiles, in which this country 'is suffering a process of deindustrialisation' due to a number of factors, he said.

Textiles accounted for 285 million dollars of the 2010 bilateral trade balance.

Paranhos said that despite the improvement in bilateral economic ties, Brazil has not yet fully grasped the potential of India, a country of 1.15 billion people, including 300 million people with high purchasing power.

The India, Brazil, South Africa (IBSA) forum was set up in 2003 to foment political coordination, trade and trilateral relations and boost South-South cooperation between the three emerging powers and less developed countries.

The foreign ministers of India, Shri S.M. Krishna, and Brazil, Antonio Patriota, discussed the growth of bilateral relations at a Mar. 8 meeting in New Delhi during a two-day IBSA forum there.

At that meeting, a goal was set to increase bilateral trade to 10 billion dollars, after the 25 percent rise seen in 2009-2010.

© Inter Press Service (2011) — All Rights Reserved. Original source: Inter Press Service

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