Despite huge geographical distance, Chile’s relationship with India has withstood the test of time. In fact, Chile offers many winning propositions to Indian companies and is an ideal springboard to foray into Latin America. The Dollar Business caught up with H.E. Andrés Barbé González, Ambassador of Chile to India, to understand how the two countries plan to strengthen their socio-economic ties and boost bilateral trade.

Ahmad Shariq Khan | Dcember 2016 Issue | The Dollar Business

TDB: India-Chile relationship is characterised by warmth, friendship and commonality of views on a wide range of issues. Are you satisfied with the way things are progressing?

Andrés Barbé González (ABG): Undoubtedly, the two countries have enjoyed a long and fruitful friendship. The relationship was founded when a delegation from Chile attended the ceremony to celebrate India’s independence in 1947. Later in 1949, the first Chilean ambassador was stationed in New Delhi. Well, we are about to complete seven decades of friendship.

I believe both countries realise the need to have a stronger accord to work more closely in the economic sphere.

Today, the Indo-Chilean ties are characterised by a large number of memorandums of understanding (MoU). Some of our recent MoUs are aimed at increasing cooperation in sanitary and phytosanitary measures, education and renewable energy, among others. Also, the two sides have recently expanded the preferential trade agreement (PTA), which I believe is indeed a big step in the right direction.

In terms of cultural exchange, I must highlight a recent development – the publication of three books by the Chilean poet and Nobel Laureate Pablo Neruda in India. The important thing is that these books were published in Hindi, Bengali and Marathi with cooperation from Dr. Dibyajyoti Mukhopadhyay, Director of Indo-Hispanic Language Academy, Kolkata. Though the bonhomie shared between the two countries is almost perfect, there is definitely scope for further improvement.

TDB: While commercial vehicles, motor cars, two-wheelers, pharmaceuticals, textiles, footwear and carpets from India have great demand in the Chilean market, India’s imports from Chile largely comprise copper ores and concentrates. Do you see the country’s export basket expanding soon?

ABG: We are working on expanding our exports-imports basket. Yes, mining is one of our biggest strengths. And in the case of copper and its derivatives, our association with India has always been remarkable. In fact, in recent times, more than 80% of Chile’s export shipments to India have been of copper and related products, and considering this we do need to diversify our product basket.

I believe, we have possibilities for expanding exports from sectors such as forestry (cellulose, etc.) and agriculture. Moreover, Chile is an ideal place to set up business in Latin America. The country offers companies, from across the world, an opportunity to explore several markets in the region.

Chile and India produce a wide range of products and services that can be inter-traded. For example, India’s Ayurvedic medicines and spices have found a growing market in Chile. Likewise, Chile has a significant variety of food products, such as cherries and kiwis, that it can offer to India. Wine from Chile is also a huge favourite in India. India is presently conversant with just a few of our export products. There are many new product segments that can be explored when it comes to exports, and our government is now working to popularise
these products in India.

TDB: Which are the key sectors where you visualise a scope of mutually beneficial collaborations?

ABG: One sector that can create a mutually beneficial proposition is construction and architecture. I am referring to high-rise buildings, including residential towers and commercial malls. Our country has developed innovative technologies and methods of construction that provide effective and high-quality solutions. And since Chile sits above a seismic zone, our buildings are constantly tested. There is ample scope for joint ventures in this sector.

Similarly, agriculture could be another area where we can cooperate. Considering the fact that both Chile and India have a strong agricultural sector, we can share our best practices and experiences. This is true especially when it comes to efficient water use, an area in which India has vast experience. India also has ample knowledge and expertise in the domain of production and conservation of solar energy, which can benefit Chile.

TDB: What are the major bottlenecks hindering growth in bilateral trade?

ABG: Without a doubt, the main and the most obvious hurdle is the distance that separates us. This is the first argument (or, at times, an excuse) which we encounter at the time of coming up with ways to increase trade between Chile and India. The second aspect is related to Customs duties and regulations. Chile is eminently an open economy and hence has been successful in signing a plethora of FTAs with many major trading countries. We see this feat as a strength of the Chilean economy. While we do acknowledge that in recent times India has made considerable progress in opening up its market – both in terms of investment facilitation and technological development– there is much to be desired on the parameters of ease of doing business.

TDB: What are your thoughts on Indian government’s flagship programmes such as ‘Make in India’, ‘Digital India’, etc.? Are any Chilean investments planned around these initiatives?

ABG: I believe ‘Make in India’ is an excellent programme. In recent times, we have observed that Chilean businessmen are more interested in visiting India. Enquiries about Indian market have also increased. As of now, there are four big Chilean companies investing in India, one of them is Sigdo Koppers that already has a plant in India. The recent expansion of our preferential trade agreement (PTA) with India is an indication of the future of the bilateral relations between the two countries.

TDB: Chile and India both have a robust ecosystem of MSMEs that contributes significantly to exports. Can this domain be strengthened further?

ABG: Just like India, Chile is home to a large number of SMEs which spearhead our economic growth. To further boost the segment’s growth, the government has developed a programme under the aegis of ProChile (the institution of the Ministry of Foreign Affairs of Chile in charge of promoting exports of products and services), called ‘Pyme Exporta’, that trains and supports SMEs to reach foreign markets. The programme is aimed towards improving the competitiveness of Chilean SMEs in international markets and helping them look for better export opportunities across the globe. The plan proposes a four pronged strategy, which includes optimisation of the formalities required to export goods and services; regulations that affect SMEs; promotion, financing and better public-private coordination, along with organisation of seminars to train SMEs and development of centres of ‘Pyme
Exporta’ across the country.

TDB: What, according to you, makes Chile a lucrative investment destination for Indian investors?

ABG: Over the years, Chile has consolidated itself into an emerging economy, and is the best-evaluated economy of Latin America. Chile is also recognised at the global level for its stability, transparency, competitiveness and high trade projections. As per many global certifying bodies, Chile is a safe place to do business, has low public debt, and possesses stable and robust financial systems and institutions. Apart from these obvious reasons to invest in Chile, there are several special incentives that are
provided on a case-by-case basis.

TDB: What are your expectations from the FTAs that you have signed so far?

ABG: The deeper a bilateral relation, the bigger are the benefits for the concerned parties. An agreement, necessarily implies a consensus of interest – it does not matter much who wins more or loses more – as both the parties ultimately benefit. Chile, for more than 40 years, has opted for a state policy of maintaining an open market economy. In our multilateral economic plan, we have consciously opted to pay heed to all requests from like-minded countries. Such an approach in recent times has led us to sign numerous mutually benefitting trade agreements with key partners. With this thought process, we look to initiate a dialogue so that in a reasonable span of time, we can actualise a comprehensive agreement like an FTA or CEPA. We believe such comprehensive trade arrangements open a wide array of opportunities, undeniable advantages and reduced tariff levels across a wide range of products, that benefit all signatories. Today, in addition to playing an active role as a member of the Pacific Alliance Trade Bloc, Chile has managed to create many mutually beneficial trade arrangements with a lot of its Asian partners, including India.

TDB: Indian government has given its approval for expansion of India-Chile Preferential Trade Agreement (PTA). How will this benefit Chile?

ABG: We believe, these types of agreements play a big role in the development of world economies. This collaboration, as earlier indicated, has been developed over a period of more than 30 years and has permitted us to position ourselves where we are today. We, Chileans, are very satisfied to have a huge range of Indian products in our country, and in the same way, we want our products to be known in Indian market.

The PTA between Chile and India has enabled double-digit trade growth over the last five years. For Chile, the key sectors driving growth are minerals, forestry products, agri commodities and animal products. From India, the major exports have been of vehicles, chemical products and pharmaceuticals. Despite a growth in trade post PTA, in 2009 the authorities in both the countries recognised the importance of deepening this relation and jointly initiated negotiations for the expansion of PTA – extending it to cover about 2,800 products. Although we have the ratification by the cabinets (obtained in April 2016), the technical parts must be studied for legal specifics by both countries prior to implementation.

TDB: India and Chile have signed several agreements and MOUs covering various fields of cooperation viz. PTA, air services, agriculture, new and renewable energy, education, mineral resources, etc. Are you satisfied with the current engagement levels? And what do you expect going forward?

ABG: Such agreements and MoUs help grow a sense of trust between nations. These bilateral relationships and associations developed at various levels are certainly essential for deepening of our mutual trade, political and cultural ties. Through these accords the two countries have strengthened their relationship. And considering the current level of engagement between the two nations, I am quite optimistic about the future of our relationship.

Containers being loaded and unloaded at the Port of Valparaíso. Located 111-km northwest of Santiago, the capital of Chile, Valparaíso is
one of the South Pacific’s most important seaports.