INDO-MEXICAN BILATERAL TRADE – WARMING UP
India and Mexico have traditionally enjoyed a good relationship. What is the current status of India Mexico trade?
Mexico was the first Latin American country to recognize India’s independence in 1947, and our formal diplomatic relations were established in 1950. Since then, our relations have been moving steadily forward. However, given the size of our economies, the interactions between both countries are just at the tip of the iceberg in terms of what could be achieved.
Trade with India has grown “immensely” in the last few years, from just over $6 billion in 2013 to over $8 billion in 2017. Mexico is India’s largest investor from Latin-America, with an FDI into India of over $1.5 million between 2009 and 2018. India’s FDI into Mexico totalled over $3.5 billion USD between 1999 and 2018. In Latin America, Mexico is the second destination of Indian FDI after Brazil. The total trade with Mexico is 40% higher than the one with Canada.
India is now among the top 10 trading partners of Mexico, with approximately 70 Indian companies, mainly from the automotive, pharma and IT sectors, established in Mexico. While Mexico is the biggest market for India’s automotive industry, there are 12 Mexican companies operating in India in various sectors, including auto parts, entertainment, information technology, energy, processed foods and industrial products.
As emerging economies, both countries have unique strategic capabilities that will allow them to take advantage of the current economic climate. Mexico’s bilateral trade with India grew about 30% in 2018 to $11 billion, and we hope to double it in times to come.
We maintain a strong, active and close relationship in economic, education, scientific and technical, cultural and political terms, and we are working towards broadening and deepening our relations in multilateral affairs.
The bulk of India’s import from Mexico is crude oil. Is there scope for other imports from Mexico to India?
Mexico is an oil-producing country and India is our 3rdlargest oil buyer. Our economies are complimentary: Mexico produces the type of oil that India purchases. We produce around 3% of the oil that India consumes, and 80% of our exports to India are oil related.
In 2017, Indian exports to Mexico stood at about $5 billion and imports from the country was at $3.35 billion. In terms of foreign direct investments, the total FDI inflow from Mexico to India is around $118 million since 2000.Mexican investment in India in 2017 was to the tune of $18 million.
However, India is a “better trader” than Mexico as it has diversified its business with Mexico. The case is not the same with Mexico as some of India’s trade policies are still closed.
What are the opportunities for Indian SMEs for collaborating with Mexican SMEs? What are the Indian business segments: Products and services that can meet the needs of Mexico; be appreciated by the Mexican consumers and so flourish in Mexico?
In Mexico, small enterprises are defined as firms employing less than 50 employees and medium enterprises are defined as firms employing between 50 and 250 employees. The SMEs play an important role in the economy of Mexico, accounting for over 90% of all enterprises, generating more than half of the national GDP and almost three-fourth of total employment.
There are significant opportunities for Mexico and India to deepen the bilateral trade and investment relationship. Potential sectors for bilateral trade and investment include IT, pharmaceuticals, auto-component, mining, chemicals, engineering goods, renewable energy, biotechnology, textile and garments and gems & jewellery.
Indian auto industry is among those few sectors that have gained presence in Mexico with some Indian Auto-component manufacturers having setup operations there. Is there a wider scope in this area?
Mexico is the biggest market for India’s automotive industry and India’s car exports to Mexico are expected to increase by 50% yearly. In the FY 2018, export to Mexico, the largest market for Indian automakers, grew 7.7% to $1.69 billion.
We already have a large presence of Indian automobile giants like JK Tyre, Bajaj Auto and Mahindra.
Tornel had been in the Mexican market for 84 years as the only Mexican technology tyre manufacturer in Mexico, and was acquired by JK Tyre in 2008.
The motorcycle industry has also grown strongly, and this trend is expected to continue. Motherson Group, which has 19 manufacturing plants in the auto parts sector in Mexico, and about 18,500 employees, has the aim of addressing the company’s future expansion plans in Mexico.
Mexico is the No. 4 global exporter of light vehicles, and the 7thlargest producer of light vehicles in the world, and incoming investments will only push the country further up the rankings.
What would be your message to Indian enterprises that are in a position to invest in Mexico?
At present, Indian investment to Mexico is valued at $3 billion, in companies such as HCL, Infosys, JK Tyre, Motherson Group, and Tata Consultancy Services, which has its largest distribution centre outside India in Mexico. At least one Indian company is present in 17 of Mexico’s 32 states. We are constantly working towards strengthening our bilateral ties.
Mexican Government conveys into the positive recognition that Mexico has received for the ease of doing business though different global rankings in recent years and is perceived in the current Mexican economy.
The best way to go about investing in Mexico is by having a strong market strategy. Growth and expansion are key goals for most business owners and entrepreneurs, and certainly, some of the most common areas to look forward are expand into new territories and target new customer markets.
In this sense, Mexico is a strategic ally in the expansion plans of the world’s leading multinationals, because it offers many competitive advantages, not least macroeconomic stability, a growing domestic market, legal certainty, a strategic geographic location, a skilled workforce and experience in medium and high technology manufacturing, which, together, constitute a unique, highly competitive platform for international trade and investment, confirming that Mexico is synonymous with opportunity.
Mexico is also an attractive tourist destination. Are Indians now visiting Mexico in significant numbers?
A record 41 million international tourists came to Mexico in 2018 –5.5% more than in 2017, and they spent 6% more while they were in the country. For this year, the Ministry of Tourism predicts that international numbers could hit almost 44 million, which would represent over 5% increase on last year’s figures. Tourism represents 8.5% of our GDP. Total tourism expenditure is forecast to reach just under $24 billion, which would also be about 5% higher than in 2018.
Mexico stands proud at 6th position in UNWTO’s report for most-visited country in the world. With 35 UNESCO World Heritage Sites, Mexico is ranked number one in all the Americas and 7th in the world – just one behind India which has 36 sites. Cancún and the Riviera Maya, along with Mexico City, account for 62% of all international tourism in Mexico.
The tourist inflow from India to Mexico is following a very favourable trajectory. We are now getting more tourism from Indians than from many European countries. In 2018, India has been among the top 20 visitors to Mexico, when we received 70,000 Indian tourists, an increase of almost 10% since 2016.
Now Mexico is closer than ever. In 2018 Mexican carrier AeroMexico and India’s Jet Airways entered into a code-share agreement on flights between Delhi and Mumbai and Mexico City via Heathrow in London. Moreover, there are many more ways of arriving in Mexico via one-stop layovers in USA, Canada, all of Europe, and recently Turkey.
We have also facilitated the visa process. If Indian travelers present any valid U.S.A., Canada, Japan, United Kingdom, or Schengen visas at the entry point, they are exempt of the obligation of getting a Mexican visa for business, tourism, or transit purposes for less than 180 days. Moreover, Indian nationals benefit from a Schengen visa-free transit policy for single-layovers at Amsterdam, Paris and Frankfurt.
The Indian outbound tourist is expected to be around 50 million globally, and Mexico is targeting a 4% market share of this. Mexico is receiving more and more Indian tourists for family reunions and romance tourism. Mexico is on the path to becoming a preferred location for India destination weddings and honeymoon vacations.
Both India and Mexico have a rich cultural heritage and knowledge is their strength, how can there be collaboration in the Educational Sector between India and Mexico.
Mexico believes in the importance of academic exchanges to forge ties between our two countries. Each year the Government of Mexico offers scholarships for international students that want to study their Masters or PhD in Mexico. At present we have nine active agreements between Mexican and Indian higher education Universities for knowledge exchange, and there are 21 agreements in negotiation stage. Fourteen scientific joint projects were undertaken in collaboration with Mexican and Indian researchers promoted by Department of Science and Technology (DST) and CONACYT.
In 2018, the Mexican Government awarded four scholarships to the students of Delhi University (DU) for post-doctoral research in Mexico City. This year, six Indian students have been awarded the scholarship by AMEXCID. To promote knowledge exchange in the public domain, more than 25 Mexican diplomats have availed the opportunity to participate in the courses offered by the Indian Technical and Economic Cooperation Programme (ITEC).
The 2018 International Summer School hosted in New Delhi received the maximum number of applications from Mexico, out of which 5 Mexican students got a chance to be a part of the 2-month academic experience in India. Fifteen students and 3 teachers from the Olinca School in Mexico City were hosted by the Bluebells International School, New Delhi as a part of a cultural exchange program. Another group of 30 students of the Leadership & Excellence Programs of the Anahuac Mayab University Mérida campus, carried out an academic trip to India and participated in a seminar organised by the Embassy of Mexico in collaboration with Delhi University to notify students of the Mexico-India relationship. There are other collaborations with Indian universities to hold talks and seminars to promote Mexican art, literature and culture.
The Guadalajara International Book Fair is the largest book fair of the Americas, and the second largest book fair in the world. It is the most important annual cultural event of its kind in the Spanish-speaking world, and this year we are proud to welcome India as the Guest of Honour country in the end of November. This will serve as a gateway to Mexico and Latin America for Indian literature and vice versa, thereby further strengthening the relationship between our rich cultures.
[The Mexican Embassy’s responses to Sumeet Sharma, Member of COSIA and Founder CEO of America Latina India Trade Promotion Organization (ALITPO) based at Monterrey Mexico.
ALITPO serves to Facilitate Bilateral trade growth between India & Mexico and through Mexico to all of Latin America. COSIA is collaborating with ALITPO in taking a trade delegation of Indian MSMEs to Mexico in August 2019 to explore bilateral business growth with their counterparts in Mexico!
For further details please visit http://alitpo.drivingdreams.in/ or contact Sumeet Sharma on 9820998399]
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