African leaders are mildly insulted by Western attempts to describe their relations with either country in language borrowed from the colonial era. In any case, the core competencies of each country are actually complementary rather than competitive, with China’s huge edge in the sale of manufactured goods, in the construction of large infrastructure projects and in the gift of everything, from buildings to vehicles, to African elites, versus India’s somewhat more modest focus on capacity building, education and training and of course its strengths in information technology. The Chinese have been known to move into certain nations and practically buy up their governments; democratic India has neither the capacity nor the inclination to try anything remotely like that. On the other hand, Indians are active in sectors like agriculture and floriculture from which the Chinese are virtually absent.
There is a broader strategic dimension as well to the alleged rivalry in Africa—India’s reported discomfort with the growing Chinese presence on the African rim of the Indian Ocean and its corresponding desire, if London’s Royal Institute of International Affairs at Chatham House is right, to strengthen its countervailing presence there. There is no doubt that the security of the Indian Ocean sea lanes is an area of major concern for India, as it is for China. But analysts such as those at Chatham House seem to overlook the fact that both China and India have compatible interests in this area, since both depend heavily on the Indian Ocean for the movement of goods, especially vital energy supplies through those waters. India has discreetly provided security to certain East African nations through offshore naval patrols when requested to do so, and the Indian Navy regularly calls at a number of African ports. But there is no credible reason to believe that any policy-maker in New Delhi would lose any sleep if Chinese ships were to drop by as well.
One interesting area of difference between the two countries’ roles in Africa is that the Chinese inroads have prompted something of an African backlash, with Zambia, in 2011, electing a President who had campaigned on an openly anti-Chinese platform. India, by contrast, is seen as low key and assimilative, willing to leave behind more than it takes out of Africa. The management styles of Indians and Chinese are a study in contrast: Indians handle their African employees better, with greater communication, trust and respect, as well as willingness to train, so that even non-Indian companies often hire Indian managers for their African operations. There is no doubt that in strictly dollar terms, China is way ahead of India in Africa, and the gap is likely to widen. But India’s own strengths and successes in Africa suggest that there is more than enough room for both to flourish in the Oldest Continent.
So what is the future for India’s presence in Africa? The second India-Africa Forum Summit in Addis Ababa in 2011 confirmed that India’s development assistance programme, its long record of political engagement and the effectiveness of its private-sector enterprises have contributed effectively to strengthening its role in Africa. As Africa continues to grow steadily—the continent has even been described, by the OECD’s Javier Santiso, as ‘the new frontier of emerging markets’—the opportunities for an older emerging market, one which President Obama declared has ‘emerged’, remain considerable.
Energy is moving increasingly to the forefront of India’s strategic objectives in Africa. With some 70 per cent of India’s oil supply imported, mainly from the Middle East, the need to diversify the country’s sources of supply is self-evident. According to International Energy Agency (IEA) estimates, India’s current growth patterns will require an annual increase of some 3.6 per cent in its energy consumption. This will oblige India to import 90 per cent of the petroleum it needs to meet its energy requirements, making Africa a key geographical focus for the Indian government’s oil and gas exploration and production company, ONGC, and its foreign arm, ONGC Videsh. Nigeria already supplies about 15 per cent of the Indian requirement, ranking as India’s second largest supplier, and it has sold shares in oil exploration ventures to ONGC Videsh. The Indian public-sector giant has also made substantial investments in the hydrocarbon sector in other African countries, notably Libya, Sudan (mainly in the new Republic of South Sudan) and off the coast of Cote d’Ivoire. The Indian private sector is not absent from the energy field either: Reliance Industries is active in such countries as Angola and Nigeria, and continues to explore farther afield. Despite such ventures, India has been unable to shake off the widespread perception that it lacks the hard-nosed strategic drive for energy resources displayed by its Asian neighbour, China, on the African continent. While the two countries’ oil corporations have cooperated in Sudan, they have made competing bids elsewhere in Africa, and China has always prevailed. (Indians would respond, of course, that there is enough for both countries’ needs in Africa.)
Another key area for future progress is telecommunications, with Indian companies investing heavily in Africa, notably Bharti Airtel, whose acquisition of Zain has given it a presence in fifteen African countries. Despite the failure of Bharti’s negotiations in 2009 to acquire a controlling share in South Africa’s Mobile Telephone Networks, the largest mobile-phone operator in Africa, it remains interested in expansion across the continent. Providing a low-cost telecom model to a growing African population where mobile telephony has already vastly outstripped fixed-line communications is a ‘natural’ for Indian telecommunications firms, which have already demonstrated the effectiveness of their model at home.
Mineral resources will also be essential to the growing Indian economy. Africa’s enormous natural resources, including iron ore, copper and coltran, and its rich agricultural lands, swathes of which have been lying fallow because of civil conflict, neglect or simple economic mismanagement, are of obvious interest to India. India will undoubtedly add to its burgeoning presence in these areas, though it will have to be particularly attentive to ensure that extraction does not slip over into exploitation.
African opinion has also largely been welcoming of the Indian presence, while understandably stressing that care must be taken to avoid exploitation. For instance, a prominent online journal from Uganda, New Vision, wrote not long ago that Africa had a lot to gain from deeper links with India: ‘there are lessons to learn from its strengths in agriculture, technology, financing and land tenure systems, and its development path offers a highly relevant example for Africa.’ My former United Nations colleague K.Y. Amaoko, then the executive director of the Economic Commission for Africa, declared in 2008: ‘There is much we could learn from India on improving the African business environment for private sector investment, public-private partnership as well as strengthening capital markets. India has been especially successful at developing its small-and medium-scale enterprises, an area where we lag behind terribly in Africa.’ He added a point not made often enough, that Indian democracy could serve as a model for the continent: ‘India is the world’s largest democracy and has a proud record of regular elections. Many African countries have recently reverted from one party or military to multiparty systems of governments. On our continent, we are grappling more severely with strengthening the rule of law and the divisions of power between the legislative, executive and judiciary arms of governance, as well relations between citizens and state institutions. We can learn from India.’
Africa is visibly moving from being a relatively modest priority in India’s foreign policy—far less important in commercial or political terms than the Middle East or Southeast Asia—to a significant area of focus. New Delhi has rightly eschewed any temptation to concentrate its attention principally on the major powers even as it develops a global role as a major player on the twenty-first-century stage. But as India cultivates this globe-striding presence, Africa has emerged as a vital area for its own ‘rebranding’—a continent where it has begun effectively positioning itself as a visionary benefactor, a source of investment, a partner in development efforts, a donor in humanitarian need and a guide on the new information highway that will lead the developing world into the knowledge economy of t
he twenty-first century.
Latin America has long been the Forgotten Continent in India—a region with which India might have found much in common but did not, separated as the two were by distance, language and the lack of any common history of interaction. Yet, with a population of 580 million, a GDP of $4.9 trillion (four times larger than India’s) and 6 per cent of global merchandise trade, Latin America is clearly a part of the world Indian policy-makers cannot afford to neglect. At 20 million square kilometres, Latin America also has a larger land surface than Russia or Canada, the largest biodiversity and the biggest freshwater reserves on earth; it is also largely democratic and peaceful, far removed from the interstate wars that have bedevilled the rest of the world. And most important, over the past decade, it has managed to grow at an average of 5 per cent despite the global recession, with figures of 6.1 per cent in 2010, and about 4.5 per cent in 2011. This performance makes it a global success story to rival India’s own, and suggests a natural fit in an era in which modern communications has ensured that geography is now history.
It is not that India has been neglecting the region. As one who briefly served as the minister responsible for the region in the Ministry of External Affairs, I am conscious of the increasing salience of Latin America in the government’s thinking. Latin Americans are also waking up to the potential of relations with India. A recent report by the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC) titled ‘India and Latin America and the Caribbean: Opportunities and Challenges in Trade and Investment Relations’ (LC/L346, November 2011) followed hard on the heels of one from the Inter-
American Development Bank the previous year—‘India: Latin America’s Next Big Thing?’ by Mauricio Mesquita Moreira—and another on the same subject by the Sistema Económico Latinoamericano y del Caribe (SELA). It is clear that India is well on the way to becoming the ‘next big thing’ in Latin America.
The trends are encouraging. Trade between India and the region of Latin America and the Caribbean (abbreviated for convenience to LAC) increased nearly ninefold between 2000 and 2010, reaching about $21 billion. While these numbers are relatively modest given the number of countries involved, the Chilean academic and diplomat Jorge Heine has outlined the case for ‘the New Latin America’—solid macroeconomic and fiscal management, as well as prudent financial and banking supervisory practices, sustained growth and poverty reduction—strengthening and enhancing trade relations with ‘the New India’—a land of ‘high savings and investment rate, and rapidly expanding middle class, whose demands for western consumer products is growing in leaps and bounds’. (To these factors could be added the LAC’s impressive public finances, current account surplus and substantial reserves, and India’s increasing outreach to the world.)
The case is a strong one. Though Latin America’s exports to India are largely of natural resources and products based on them, its import basket differs from the usual stereotype. Unlike Chinese exports, which have tended to flood the market at prices at which domestic manufacturers cannot compete, at least half of India’s exports (as Heine and the Indian diplomat R. Viswanathan point out in a recent article in Americas Quarterly) ‘consist of raw materials and intermediate goods such as bulk drugs, yarn, fabrics, and parts for machinery and equipment, which can help Latin American industries cut production costs and become globally competitive’. The worry that increased trade could become a net negative for Latin America, by reducing it to a purveyor of agricultural products and an importer of finished goods (leading even to possible ‘deindustrialization’), therefore does not apply to trade with India. Of course, India’s food security needs will require it to continue to import ever larger quantities of such natural-resource products from the region—oil, copper, soya and iron ore feature prominently—but LAC countries could, in turn, develop more sophisticated and better targeted farm products which would be of interest to Indian consumers in the years to come.
In his Inter-American Development Bank study, Moreira concluded that while ‘the fundamentals exist for a strong trade relationship between the two regions’, economic cooperation is being hampered by tariffs and other non-tariff trade barriers. The answer to this, of course, is more trade and less protectionism. ‘More trade is likely to strengthen the virtuous circle in which trade boosts incentives for cooperation while cooperation creates even more opportunities to trade,’ argues Moreira. The $20 billion in India–LAC trade is highly concentrated in a few countries, with Chile, Brazil, Argentina and Paraguay providing the bulk of the region’s exports to India, and Brazil, Peru, Colombia and Nicaragua a large chunk of the imports. India has, however, concluded preferential trade agreements with Chile and with Mercosur which have contributed to improving trades with the countries concerned, and there is no reason why a similar approach could not be applied to the currently underserved countries of the LAC.
Indian investments in the region are also increasing, amounting to some $12 billion since 2000, with Indian companies present and active in six key LAC economic sectors: agrochemicals, energy, IT and IT-enabled services, manufacturing, mining and pharmaceuticals. Some of India’s bigger companies are already an established presence in the region, including ONGC Videsh, the IT majors Tata Consultancy Services (TCS) and Wipro, and the agrochemical giant United Phosphorus. Indian investment is helping Latin America to diversify its sources of economic growth, making the region less dependent on its traditional source of economic strength, commodity exports. Smaller Indian ventures are also making inroads in the region, thanks to individual entrepreneurs who have challenged convention by making new lives in the region. I met a young Sikh in Colombia who has established a flourishing Ayurvedic practice in Bogota, helping fuel high-level interest in India’s alternative health systems.
As in Africa, additional investments are likely in the relatively unexplored area of agriculture. In its quest for food security, India cannot help but notice that many LAC countries possess exactly what India is looking for beyond its own borders: in the words of Heine and Viswanathan, Brazil, for instance, has ‘a large and fertile land mass with abundant water that can significantly increase the production of food—something India will always need, be it soybean oil, legumes or sugar’.
History has also planted the seedlings of a literary connection. When I published my first novel, The Great Indian Novel, in the United States, the then UN secretary-general, Peru’s Javier Pérez de Cuéllar, told me how enamoured he was of Indian literature and poetry as a young man, especially the work of Tagore, evocatively translated by Argentina’s legendary Victoria Ocampo, Tagore’s special friend. Tagore and Ocampo, it is said, inspired each other to write beautifully, leaving behind a poetic legacy that is part of the Indo-Latin heritage. The legacy was broadened by the work of Octavio Paz, whose service as Mexico’s ambassador in India witnessed the flowering of profoundly evocative poetry and prose about the land he saw around him. His books The Monkey Grammarian and his valedictory In Light of India are both testaments to a sophisticated affair with India that may yet animate a new generation of Latin American intellectuals. Tagore’s appeal lingers, but more contemporary Indian writers, some of whom have been translated into Spanish, have not made a comparable impact. On the other hand the magic realism of Gabriel García Márquez has seeped into the sensibilities of many Indian readers, including in translation into Malayalam, making him one of Kerala’s most beloved novelists.
There are other affinities: a Gujarati businessman in Medellin runs a Mahatma Gandhi Foundation, which is devoted to propagating Gandhian teachings, in that violence-prone city. Che Guevara’s two-week visit to India in 1957, during the course of which he met Nehru and wrote to him to offer Cuban aid in the Kashmir earthquake that year, is fondly remembered, even though no aid was actually sought or received. The most popular ‘telenovela’ in Brazil in the first decade of the twenty-first century was a soap opera set in India, with Brazilian actors portraying Indian characters. These are all cultu
ral connections waiting to be developed and built upon, which could one day give people-to-people contact more depth and meaning.
Another area with huge potential for growth is information technology. In Latin America as elsewhere, India’s IT and IT-enabled services industry has played a significant role in expanding India’s presence. Latin America clearly welcomes this and is looking to greater Indian involvement in these areas, including some significant technology transfers. As Indian IT companies establish themselves in the LAC, hire locals, train them in Indian ways and expose them to the opportunities generated by providing IT-enabled services in a globalized world, this sector is likely to be seen increasingly as India’s unique contribution to the development and prosperity of the region. On another note, when I was in Peru, the mayor of Lima had a one-point agenda for my meeting: he wanted me to persuade the Tatas to open a Nano factory in Lima. (I took the message back to India but failed. Perhaps Tata’s priorities might yet change in the years to come.)
The recent growth of trade and investment ties between India and Latin America has also encouraged much closer diplomatic relations. Today, LAC countries have nineteen diplomatic missions in New Delhi, while India has fourteen missions in the LAC region, both representing significant increases from twelve and seven, respectively, in 2002. In 2010 India opened a new embassy in Guatemala to cover Central America, but pending invitations from countries like El Salvador and the Dominican Republic to do the same have been deferred solely because of a lack of human resources in India to staff new establishments adequately. Inadequate attention to Spanish-language training in the Indian Foreign Service has also given New Delhi far too few diplomats ready, equipped and inclined to interact with Latin America in the language with which it is most comfortable.