Indo-Mexico Economic Relationship

Mexico is special in terms of its relations in the International scenario. Presently it is a member of the world’s largest economic area NAFTA and has a free trade agreement with the European Union. It has FTAs with some 30 countries, including some countries of Central and South America. [br]

Mexico was the first Latin American country recognizing India better. Jawaharlal Nehru sent his sister Vijayalakshmi Pandit as India’s first ambassador to Mexico.

Mexico is special in terms of its relations in the International scenario. Presently it is a member of the world’s largest economic area NAFTA and has a free trade agreement with the European Union. It has FTAs with some 30 countries, including some countries of Central and South America. [br]

Mexico was the first Latin American country recognizing India better. Jawaharlal Nehru sent his sister Vijayalakshmi Pandit as India’s first ambassador to Mexico.

The Prime Minister Rajiv Gandhi had visited to Mexico in the late 1980s was joint activism on the disarmament front. India’s nuclear tests in May 1998, however, generated some political distance from Mexico, which swears by nuclear disarmament. Equally significant have been the differences on UN Security Council expansion.

As two major emerging economic powers and inheritors of a strong diplomatic tradition, India and Mexico are now well on the way to doing a lot more together on the world stage.

Though there is an overall economic slowdown, including trade stagnation over the last three years still, Indo-Mexican bilateral trade has been growing at a remarkably stable rate. In the year 2003, Indian exports to Mexico are expected to cross US$ 530 million, registering a growth of over 16%. Mexico has already regained its position as the top destination for Indian exports to Latin America. Though Mexican exports to India, mainly crude, have also increased substantially over the last three years, the net balance still remains in favour of India. Indian exports basket to Mexico having high substantial potential for future expansion is pharmaceuticals; gems & jewellery; power sector equipment and auto parts. The services sector, mainly IT and software, also offers tremendous future scope.[br]

The Major difficulty behind the promotion of trade between the two nations is geographical distance, lack of direct shipping facilities, expensive credit, language barrier and absence of interest among Indian companies to explore long-term linkages. For enhancing the trading between the two nations an important step in this direction was the offer of a unilateral line of credit for an amount of US $ 10 million by the Exim Bank of India to its Mexican counterpart, Bancomext, for promoting bilateral economic and trade relationship.

Investment

Mexico represents a large, stable and growing market both for trade and investment. Investments made by persons of Indian origin in Mexico for the period 1994- 2000 amounted close to US $ 1600 million in nearly 50 joint ventures. These investments are generally dominated by investments in the steel sector. Mexico’s FTAs with a large number of important trading partners can help Indian companies in achieving better market access by way of joint ventures and investments).

Present Policy Initiatives

A number of bilateral policy initiatives are undertaken currently for enhancing the bilateral trades between the two nations. Both the countries are trying to establish a joint business group to keep the business community fully engaged in the future planning. The Exim Bank of India has extended a credit line of US$ ten million for promotion of Indian exports and projects to Mexico.

Conclusion

Mexico is already the largest destination for Indian exports in Latin America with a steady upward trend. The strength of this market is its stability. Though commodity trade would remain as a major activity in the short-term still, the Indian businessmen would be well advised to explore long-term linkages by way of joint ventures and investments.