FTA with India can boost trade 

On the physical map Chile might appear to be a distant land, but the Chilean industry is keen to expand the spectrum of products it exports to India. Though there is Indian investment in this South American nation, the movement of people between the two countries has been very small. The Ambassador of Chile in India, Mr. Cristian Barros spoke to THE BLUE MOON Editor about plans to increase Chilean products in the Indian market. Some excerpts :    

Bilateral trade between India and Chile has not shown encouraging signs in the past couple of years. The trade volume slid down from 2.41 billion USD in 2007 to 1.96 billion in 2010. What could be the reasons for this decrease? 

Relations between two countries cannot be measured only in terms of economic, trade and finance. It is a relation of cultures, friendship and much more. Chile is the most open country in the world as far as trade is concerned. We have Free Trade Agreements (FTAs) with all major economies of the world, but India is not in the list so far. We have FTA with USA, European Union, China, Thailand and a number of countries. We have a partial treaty with India which we are trying to expand to include more products. We know that we must do more to make our presence strong in the Indian market. As far as trade is concerned, our projections for the current year are to reach a target of 2 billion USD. We plan to take all measures to achieve our goal. In what we export to India copper forms 90% of the entire bulk, but we want to get into other products too. Chilean wines can come into the India market. However, what hinders the export from Chile to India are the high tariffs on the Indian side. In spite of these high tariffs we have a lot of enthusiasm to overcome this hurdle. Already 10% of the total wine imports into India are coming from Chile. 

Are there any negotiations going on to reduce the tariffs which are obstructing a faster growth of imports from Chile ? 

We have an agreement on 120 items for reduced tariffs. Now we are looking up to a new agreement by year end with the Ministry of Commerce of India to negotiate lesser tariffs for 1000 products. The last such meeting on the subject was held in 2008. 

If Chile has FTAs with several countries, then what could be the reasons that it does not have it with India? 

There are no reasons for not having an FTA with India. It is a matter of priorities and a matter of time. We are slowly moving in the direction of a FTA with India. No matter we are a small country, we have many advantages; one of them is that we have agreements with many countries. 

Our tariffs are very low. We have average tariff of just 2.6%. On cars we have a tariff of 3% . I give an example how Indian car manufacturing companies are at a disadvantage due to absence of FTA. TATA and Mahindra exporting to Chile have to bear a tariff of 3% while auto manufacturers from China, Korea and Japan do not have to pay this 3% which gives their auto products a price advantage above Indian manufacturers.  

Are Indian companies largely into trading in Chile? Are they investing too? 

The Indian manufacturer Leyland Ashok is much a part of Chile. They are assembling trucks for Latin American countries in Chile. There are investment from Jindals and TATA. Over 1 billion USD have been invested by such Indian companies.    

There is no obvious Chilean investment in India. Any reasons? 

There is no Chilean investment in India so far, but we are looking into the wood market. We plan to produce a certain quality of wood in India. But there is investment in India by Chilean companies. Companies from Chile have invested 2 billion USD in the Mumbai stock market last December. 

Is the trade with India slow due to the large distance between the two countries? 

Distances is a problem of the past. Chile's trade with Asia is 1/3rd of its entire trade volume with the world. Our first trade partner is China, then Japan and Korea. Of the top five countries with which we trade, three are from Asia as I mentioned earlier. 

In April 2008 when the Indian President visited Chile an air services agreement was signed between India and Chile, but till date there is no air service between the two. What could be the reasons? 

Yes, we do have an air services agreement, but there is no company to take it up. There are no direct flights, but it will come in future.   

This implies that there is potential for tourism between the two countries? 

Tourism is a very important enterprise for us. We get about 3 million tourists in a country of 17 million. Average we have 2 million tourists going out every year, but only 1000 come to India; a lot more go to China. They go to Egypt. Today more Indian tourists are coming to South America. 

Are there people of Indian origin in Chile? 

Yes, small number, but they are well integrated. Now we are working on a project with India to move archaeological artifacts to Chile for an exhibition. We have had two Nobel laureates from Chile who were Rabindra Nath Tagore's contemporaries and had stayed long in India.