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They may be very different in their respective gigantic sizes – India has 1.2
billion people (the second largest population in the world) and Brazil ‘only’
less than 200 million, the fifth largest in the world. Brazil has an area of
8.51 million sq km, making it the largest country in the Southern Hemisphere,
and India ‘only’ 3.28 million sq km, the largest country in South Asia.
Comparable Economic Performances
But they have had a rather similar economic performance since the mid 20th
century. Brazil’s GDP increased by 7 percent from 1950 to 1961, 4 percent
between 1962 and 1967, 11.1 percent from 1968 to 1973 (First Oil Crisis) and 6.9
percent from 1974 to 1980. In 1981, however, the GDP declined by 4.4 percent,
contracting again by 4 percent in 1990, and once again by 0.9 percent in 1992,
after having increased by only 1.1 percent in 1991. But the average increase of
Brazil’s GDP for the whole period 1981-1992 was positive, 2.9 percent,
notwithstanding the hindrances of the so-called ‘Lost Decade’. In 1994, the
Plano Real succeeded in stabilizing the economy and Brazil resumed growth on a
self-sustainable basis. It increased from 4.4 percent in 2000 to 5.1 percent in
2008. Due to the economic crisis of 2009, the Brazilian GDP practically did not
grow in that year, but recovered significantly the following year, to achieve
7.5 percent of increase in 2010. Despite the ongoing global crisis, the forecast
for the GDP increase in 2011 is roughly 3 percent.
India, on the other hand, grew at an annual rate of 5.5 percent from 1980 to
1989, undergoing a temporary decline in its GDP growth rate from 6.9 percent in
1989 to 4.9 percent in 1990 and to
1.1 percent in 1991 like Brazil. In the last four years, the Indian economy has
experienced outstanding levels of development, growing from 9.4 percent in 2007
to 8.3 percent in 2010. Today, India’s economy is the ninth largest in the world
by nominal GDP and the fourth largest by purchasing power parity (PPP). India
emergence as an important global trader is underscored by its rise as the
seventh largest exporter and the eleventh largest importer in the world.
Battling Economic Adversities with Strength and Substance
Their respective performances explain why Brazil and India are still bravely
resisting the adversities arising from the global economic crisis. Financial
development, efficiency and size of banks and other financial services, as well
as the business environment, financial stability, transparency and market
leadership in both countries, impel consistent bilateral economic cooperation in
trade, investment and tourism. Their economies have inherent advantages –
stability, based on private initiative, openness to the world market and a
stable currency.
Taking into account the stability of its currency, its banking system and the
risk of the sovereign debt crisis – three very important elements in the
analysis of economic stability – Brazil today finds itself in a rather stable
situation, after receiving US$160 billion in Foreign Direct Investments in the
last 7 years (40% of the total FDI directed to the whole of Latin America). In
2011 alone, the country lured around US$60 billion in FDI (including some
investments from India as well). Out of the 500 major trans-national companies
in the world, more than 400 have invested or are investing in the country.
Indian investments in Brazil are directed to the emerging areas of information
technology, biotechnology and pharmaceuticals, besides oil, taking advantage of
the recent huge off-shore oil findings in Brazil.
Burgeoning Economic Partnership
The awareness of their respective capabilities and the need for expanding their
economies has enabled Brazil to emerge as India’s largest trading partner in
Latin America. India became one of the most important foreign direct investors
in Brazil in 2011. India and Brazil are already cooperating in several areas of
mutual interest like science & technology, pharmaceuticals, space, processed
food and consumer goods, infrastructure and industrial projects, automotive
components and engineering goods, chemical products, agro-chemicals, pesticides
and insecticides.
The three sectors that have become extremely important for present day
India-Brazil relations include energy – particularly tapping the world fuel
ethanol market, IT and software, since Brazil’s IT market is estimated to be
over US$25 billion and pharmaceuticals/biotechnology, which is estimated to be
US$12 billion.
Among the main Indian groups already established in Brazil, or on the way to
doing so, are TATA Motors, TATA Consultancy, TATA Steel, Reliance, Essar
(petrochemicals, steel, mining), United Phosphorus Ltd, Renuka Sugars, Micromax,
Infosys, Suzlon Group (which became very active in the area of eolic energy in
the State of Ceará, in association with some local partners), Arcelor Mittal,
Kenersys Kalyani Group, Wipro, Ashok Leyland, Ranbaxy, Wockhardt and ONGC.
On the other hand, some Brazilian companies are already well established in
India, like WEG Industries (India) Pvt Ltd, Gerdau and Marcopolo. Tata Marcopolo,
which is very active in the area of bus manufacturing, is a joint venture with
the Tata Group. Other companies have become active in the Indian market through
an association with local partners, like the company LARA that works in
conjunction with Antony Waste Handling Cell Pvt Ltd. Other companies like
EMBRAER, VALE and PETROBRAS have made inroads in India through their offices in
the region.
In 2008, the value of Indo-Brazil bilateral trade exceeded US$4.5 billion, but
was still far from the potential of two important global traders. In 2010, this
value surpassed US$7 billion, and in 2011, it is expected to reach US$10
billion, as established by the concerned Indian and Brazilian authorities as
their short term goal. Accordingly, in the beginning of December, the figures
had already surpassed US$9 billion.
The types of products the two countries exchange are a reflection of the
requirements of their respective markets during specific periods. In case
domestic markets are not able to produce a certain product, the same is then
imported from the other country. The main products exported by Brazil to India
include airplanes, motor pumps, raw sugar, crude oil, copper sulphates, soya
oil, denatured alcohol, other minerals of copper and its concentrates, asbestos,
valves, and precious and semi-precious stones. Among the main products exported
by India to Brazil include diesel oil, equipment related to wind energy, coke of
coal, lignite or peat, naphtha, cotton and polyester yarns, pigments, medicines
and chemicals, vaccines for human medicines and aviation fuel.
The economic partnership is a win-win game that both Brazil and India are likely
to engage in for a long, long time.
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