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India and Latin American countries need to boost business ties

By A Staff Reporter

Mr. Vivek Katju, Secretary (West|) Ministry of External Affairs, recently underscored the need for India and the Latin American and Caribbean (LAC) countries to cash in on their complementarities and build stronger business to business (B2B) relationships for giving a fillip to India-LAC trade, which was currently far below its potential at $17 billion.

Inaugurating the India-Latin America & Caribbean (LAC) Business Summit, organized by FICCI and the Ministry of External Affairs, Mr. Katju said: “We are overcoming slowly and steadily the obstacles of the past and the diffidence in terms of language and distance between India and LAC countries was dissipating.”

Responding to the observations by Dr. Amit Mitra, secretary general, FICCI, Mr. Katju said that India and LAC countries had shared concerns in global affairs, be it climate change negotiations or those in the multilateral trade regime. He saw immense scope for collaboration between businesses of the India and the LAC region in beefing up India’s food security and in areas relating to development of agriculture and agri-processing.

Mr. Miguel Caro, Vice Minister, Home Ministry of Bogota, Colombia, noted that the government was committed to establishing free trade agreements with key strategic partner countries to generate better conditions for investment and trade. Some agreements that are currently being examined are: United States of America, Chile, Honduras, Salvador and Guatemala (already signed). European Union, Canada, EFTA (under negotiation).

Some of the major reasons for investing in Colombia are: improved business environment: During the past five years, the Colombian economy grew by 4 per cent per year. In 2008, Colombia's GDP registered an increase of 2.5 per cent, a positive growth during global recession; quality of human resources: According to IMD 2009, Colombia is the regional leader in entrepreneurship, highest labor force and is ranked second most flexible labour system in Latin America, according to the World Bank 2008; an ideal export platform, Colombia holds an advantage of having signed trade agreements.

This gives companies preferential access to markets that extend to more than 1.2 billion consumers, a circumstance that is only enhanced by the strategic location of Colombia; incentives for investors: In the 2010 “Doing Business Report,” The World Bank ranked Colombia as the most business friendly country in Latin America.

These incentives include: Free Trade Zones, legal stability contracts, and a 30 per cent tax deduction on the cost of purchased machinery.

Mr. Krishnedat Baijnath, ambassador of Suriname to India and dean of GRULAC (Group LAC), pointed out that LAC and India were complementary to each other in many ways. While the LAC region offered India access to oil, gas, mining and forestry and agricultural resources and a literate labour force, India had a reservoir of expertise in various fields and provided value addition to the LAC region by IT, pharmaceutical and manufacturing companies, which contributed to human resource development, reduction cost of healthcare, employment and industrialization.

Mr. Fernando Schreiber, advisor to the Minister of Industry, Energy and Mining of Uruguay, said that his country was a member of Mercosur, a regional integration process with which India had a preferential trading agreement. Uruguay, he said, was strategically located in the region, having logistical access to the principal economic centres. The capital city of Montevideo was the gateway to the entire region with he advantages of a free port, free airport and free zone regimes along with tax exemptions and other benefits.

According to a FICCI-Deloitte Paper presented at the business summit on “India and Latin America & Caribbean (LAC): Business Environment and Opportunities for Collaboration”, India and LAC can further strengthen & explore business opportunities in the following sectors:

• Collaboration in the IT and software sectors with India’s experience and untapped markets in LAC. The Indian Information technology companies are exploring new and non-commercial markets in Latin America to expand their business. Recently, the Brazilian government communicated to the Indian Department of Telecommunications (DoT), its interest to discuss the e-auction method that would be used by India in the 3G broadband wireless spectrum.

• The financing and banking sectors, with the growing significance of e-commerce and mobile commerce, could be another area of joint study and technical collaboration.

• Urban Infrastructure, such as projects for railways, highways, roads, ports, power plants, electricity, water and gas distribution. India’s infrastructure and transportation systems could greatly benefit from the highly developed systems existing in some of the LAC countries.

• Further, there is a strong urbanisation taking place in India, which would require better infrastructure management, power distribution and improved transportation.

• Pharmaceutical products, medicines and healthcare with an increased focus on medical tourism and biotechnology.

• Ethanol production in India with Brazilian technology and sale of ethanol produced in Brazil to India.

• Chemical products, agri-chemicals, pesticides, insecticides can be exported from India to LAC. India could adapt the farming techniques used by countries in LAC and could jointly produce advanced agricultural equipment.

• There could be increased business opportunities in the renewable energy including bio fuels, with both regions recognising the growing need to develop this sector.

• With climate changes wreaking havoc in the agriculture output, India and LAC could synergise and complement each other to meet the growing food crisis.

• Brazilian companies are seeking Indian suppliers of auto parts and are also seeking possibilities of collaboration for joint production. Indian companies could consider establishing manufacturing plants for two wheelers in Brazil.

• Brazilian companies are looking for Indian partners to set up operation and manufacturing units for shoes in India.

• E-governance

• Unique Identification (UID) in India and digitization
• Safety and security systems.