India Eyes Latin America

The competition between China and India -- the world’s largest dictatorship and the world’s largest democracy -- will be a defining feature of 21st-century geopolitics. Because China opened its economy more than a decade before India did, the Middle Kingdom has a clear head start in the global battle for economic influence. Yet the South Asian giant is rapidly gaining ground on its northern neighbor, and over the long term its democratic system seems far more stable than the autocratic Chinese model. When assessing U.S. grand strategy in Asia, American policymakers view India as an important counterweight to China. Closer to home, India may also serve to balance Chinese economic clout in Latin America.

“China’s rise in bilateral trade with Latin America is the greatest of any region in the world -- an astonishing 18-fold increase over the past decade,” Agence France-Presse reports. Chinese commodity demand has greatly boosted GDP growth in Argentina, Brazil, Chile, Peru, and other resource-rich countries, thereby lifting millions out of poverty. These economic benefits are worth celebrating. Yet Beijing’s burgeoning hemispheric footprint has prompted security concerns in Washington, since Chinese military and political ambitions remain so murky. Moreover, China is helping to prop up the Hugo Chávez regime in Venezuela, and it is also expanding cooperation with Chávez acolytes in Bolivia and Ecuador while strengthening ties with the Castro government.

Whereas Beijing’s newfound interest in the Western Hemisphere has understandably raised some eyebrows, India’s growing activity is unambiguously good for both Latin America and the United States. In a recent issue of Americas Quarterly, political scientist Jorge Heine and Indian diplomat R. Viswanathan observe that trade between India and the Latin America/Caribbean (LAC) region increased eightfold between 2000 and 2009, reaching about $20 billion. To be sure, that figure is dwarfed by overall Chinese trade with the LAC region, which totaled roughly $140 billion in 2008 (according to the Latin Business Chronicle).

But as The Economist noted a few years ago, Indian companies “have begun to make significant investments in software, pharmaceuticals, business software and natural resources.” (By contrast, Chinese investment in Latin America “has hitherto amounted to less than meets the eye.”) Since 2000, write Heine and Viswanathan, Indian companies have poured $12 billion worth of investment into six key LAC economic sectors: agrochemicals, energy, information technology (IT), manufacturing, mining, and pharmaceuticals. Indeed, many Indian firms have established a big presence in the region, including ONGC Videsh (an oil giant), Tata Consultancy Services (an IT powerhouse), and United Phosphorus (a massive agrochemical company).