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| Geopolitics imagery: Credit- Shutterstock |
Introduction:Recently the president of Brazil, Shri. Lula Incaico Da Silva met the honorable PM of India Shri. Narendra Modi on the sidelines of G-7 meet in Japan. In the past 8 years under the leadership of EAM Jaishankar & Sushma Swaraj there has been a face rise between the 2 countries who are also colleagues in the powerful BRICS grouping set up in 2010. Also, the former Brazil president Shri. Jair Bolsonaro was the chief guest for India's republic day parade on 26 January 2020 which was a major diplomatic move considered by experts to make an inroad into the slippery slope politics of South America. In addition to the above 2 developments, its also imperative to note that India also launched Amazonia-1 satellite developed by Brazil into the space via ISRO. India's first cultural center in Latin America was opened in Sao Paulo in May 2011.However, this blog article covers only the economic-political aspect of the bilateral relations.
Geographically speaking, Brazil is the fifth largest nation in the world it borders almost all of the major South American nations via Land, the population of which accounts for almost about 42.25 crores, the country of Brazil also has about 24 rivers along with a wide range of mountains, hills & different topographies which makes it good for security apparatus. It also has a huge maritime border of 7491 km which is twice its land border length of Bolivia. Most of the maritime border falls in the Atlantic Ocean which is startegically important for many nations as it serves as an important maritime route for connection between 4 important regions of West Africa,West Europe, North America & South America.The comparitive advantage along with importance of these 4 regions is well covered by many historians as well. Brazil is one of the fastest growing economy of Southern America with its growth rate touching 4.6% in FY-2021 a phenomenal increase from -3.9% growth rate in FY-2020.
Brazil has one of the largest armies with an army of almost about 4 lakh people, its air force has about 80,937 people with a strong fleet of aircrafts similar are the numbers for the Brazillian Navy as well. With these strengths its in no doubt that India will like to improve its diplomatic engagement with the fifth largest nation in world according to land mass, to gain a strong foothold in the Atlantic Market.
History & Backstory:However ,we must note that just like any relation in our personal life has ups & downs in the same way the relations between India & Brazil have gone through serious rough times in the past. Brazil and India established formal relations way back in 1948, India has a consulate general in Sau Paulo & Brazil has a consulate general in the financial capital of India, Mumbai.
Brazil was one of the first nations to recognize India as an independent country, Brazil got its independence on 7 September 1822 almost 126 years before India got its from the British colonial imperial rule. Just like India, Brazil also underwent 300 years of Portugese imperial rule in their country. Both countries are also very strong in terms of culture if India had the huge empires of Raja Raja Chola,Lalitaditya Muktapida, Chandragupta Maurya, Brazil also had very charismatic rulers in the form of Dom Pedro I to name a few. The next segment will be focused on state visits which are extremely important when we are analysing the political nature of the relations between the nations.
State visits:One of the best ways to evaluate the partnership between 2 countries is by taking the state visits as a proper yardstick as it means that the relationship between 2 countries is being taken to a complete different level as there are multiple possibilities like cracking of an economic deal or even completion of pending projects as the governments go on a high vigil during this time, for example: After the Howdy Modi event was conducted in Houston in 2019 the trade as well as political relations between India & USA have been elevated to a whole new level.
The first state visit(at the level of PM/President) happened in 1954, by the first Vice President of India, Shri.Dr. Sarvepalli Radhakrishnan, the second state visit was by Smt. Indira Gandhi to Brazil in 1968, one possible reason may be because of Brazil's condemnation in a harsh language towards Goan Liberation from Portugese imperial colonial rule in 1961 by the great Indian Army, where Brazil condemened & stood behind its ally Portugal during that point in time however, since it became clear that Indian Army will liberate Goa, Brazil took a pragmatic stance by backing India as well, given that Brazil had just started to become an international player in geopolitics as well can be considered for Brazil backing Portugal during the inital years of Goan Liberation.
However, the optimism on both sides still remained which was forecasted in the then prime minister of India, Smt. Indira Gandhi's visit to Brazil in the year of 1968. However the diplomatic and even trade engagement remained limited with Brazil for a very long period of time which may have occured due to the cold war situations in the world where Brazil was considered as close to USA & India to USSR via Friendship Treaty 1971, given that even India's economy was not in a great stage the progress of relationship remained slow but steady. For further details it can be accessed here.
After the 1991 economic liberalization policies of PV Narasimha Rao, it led to a drastic shift in India's economic policies which aided its relations with Brazil as well. The diplomatic engagement of India with Brazil has increased since then, at a quick pace. There was the trip led by PV Narasimha Rao in 1992 to Brazil followed by a trip from Fernando Cardoso, the ex Brazilian President in 1996. Since then the state level visits between the countries have improved and so have the political-economic ties between the nations.
In last 9 years itself, PM Modi has visited Brazil more than once & the same can be said about Brazil as well. Most of the ministers of Indian Government of both cabinet as well as MoS level of all major ministries the same has been reciprocated from Brazil as well from time to time. Today, Brazil & India are also part of groupings like BRICS & G-20 which are deciding the fate of currency wars, are at forefront of de-dollarization to name a few initiatives. Other blocs of which India & Brazil are part of BASIC, WTO,IBSA, International Solar Alliance, Biofuture Platform to name a few.
For example: In the latest visit of Jair Bolsonaro to India was to promote cooperation in multiple fields like,natural gas-biotechnology-bioenergy-traditional systems of medicine & homeopathy, cyber security,geology, mutual legal assistance, animal husbandary, animal husbandary, dairying, culture & mineral relations. There was also adoption of Action Plan to Strengthen & Startegic Partnership.
Economic relations: One of the biggest cornerstone of India-Brazil relations is definitely the trade relations between both of them. This the prime reason why both are also part of BRICS as well as G-20. Brazil is one of the largest trading partner of India in the latin american region as a whole. There are many indicators for the trade relations like balance of payments, treaties signed, products traded & dominant sectors of the economy as well. India-Brazil apart from sector specific MoUs have a bloc level treaty between India-MERCOSUR.
For uninitated, MERCOSUR is a trading bloc in South America comprising of the countries of Argentina, Brazil,Paraguay & Uruguay, which are neighbouring countries & form a lot of geographical-economic clout in the continent as well. It is a customs union since 1995, customs union is that kind of economic integration which has free moment of goods along with industry specific trade. It is the third largest integrated market in the world after EU & NAFTA. The treaty was signed in 1991 as a PTA but took form of customs union soon in 1995. It is absolutely true when people say that India's foreign policy changed after the 1991 LPG reforms. In 2006, India-MERCOSUR PTA has been expanded to multiple products, in 2009 the first JAC was conducted in Uruguay & expansion of the agreement. In second, JAC was held in 2010 which was expanded to more products.
The bilateral trade between both the countries has increased substaintally in the last few years. India was Brazil's 7th largest import source country & 18th largest export destination. In 2015, Indian Exports to Brazil was almost about 4.29 billion US$, in 2019 it was almost about 4.257 billion US$ which meant though there was a fall in the export figures in for 3 years between: 2016,2017 & 2018 with exports falling as low as 2.48 billion US$ with the trade balance also being in negative. In 2022, according to COMTRADE United States, India's exports to Brazil was about US$9.72 billion which is a huge rise from the last year.
The major products that India exported to Brazil was refined petroleum whose value was almost of 1.23 Billion US$ as of 2021(Which is bound to rise due to India's Russian oil imports & redefining of maritime routes). The highest import into India from Brazil was in 2.23 billion US$. Economic Complexity Index score of India was of 0.61, ranking of 41/131 & corresponding for Brazil it was at 49/131.
Trade ECI estimates country's ability to produce as well as export sophisticated products in the world. The higher rank is the higher is the export basket of the nations as well. Economic Complexity Index is an important indicator it is based upon geography of trade & captures the sophistication of country's exports.
India's updated exports of mineral fuels, distilled products in the year was of 4.23 billion$, followed by miscallenous chemical products whose exports was worth to the tune of 1.45billion $ which makes the contribution of these 2 products exports close to 58.25% of the total export basket. Looking at the industries it seems that India looks in serious position to become an essential trading partner for Brazil as far as international trade is concerned, this will also convert into long term political gain as Brazil imports almost 8 million metric tons or approximately 60 million barrels. The other important area of Brazilian sector is of agriculture-services-mining & manufacturing where if data is taken into consideration then exports of plastics which was one among the top 15 products exported as well, for the uninitated plastics form a very important part of the manufacturing process of any good in the world.Overall, if we analyse India's balance of trade with Brazil its in a deficit mainly due to the imports bill of crude oil of which India is a 80% net importer in the overall sector.
The most interesting sector where Brazil is a net importer is the rubber products, at one time Brazil was the largest rubber producer in the world until the infamous rubber theft episode took place in 1870s from where Brazil hasnt been able to recover its old dominance as a result of which India's rubber exports to Brazil was almost upto 200.44 million$ which is one among the top 7 export products. India's auto exports were also over 529.12 million $, this segment is also of particular importance as it shows that we are trying to hard in order to increase our logistical penetration in Brazil which is imperative for the growth story of Brazil in the long run.
Along with trade of visible goods, the trade of capital flows is also equally important as the balance of payments is formed as a sum of current account deficit/surplus+capital account deficit/surplus+- errors. In this section we should probably consider investment by Indian companies as well.The total Indian investment in Brazil is close to 6 billion$ whereas Brazil invests only 1 bplillion $ in Indian industries as of the data available on the segment, however the 6 billion $ was worth making inroads into assisting infrastructural development & providing a counterbalance to the dragon factor & its reach into critical mining sectors of Brazil which also led to Brazil accusing China of dumping products persistently in their country in the years of 2016(time of Rio Olympics) which has given India a way to enter the Brazillian economy in a huge manner with Sterlite winning a 800 million $ worth transmission line in Brazil. This is a good step however, it needs to be consistently improved so that these short term gains are converted into long term gains for which India has also set up India-Brazil Business Leaders Forum for trade promotion as well. There are also groups that take forward sectoral economic reforms along with sectoral based trade.The interesting fact was that despite being a global leader in services exports across the world, India's service exports to Brazil was negligible, this is perhaps one area where increasing India-Brazil cooperation can work upon as well.
Major imports from brazil are in agriculture namely for items like cumin seeds.
