BACKGROUNDER

India-Brazil Relations

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  • July 21, 2014

    The Core

    The basis for the development of ties between India and Brazil rests on trade and commerce.
    The regional powerhouses share a relationship that is gradual and progressive. However, the Indian Prime Minister Narendra Modi’s visit to Brazil for the BRICS Summit can give a fillip to their bilateral association. The India-Brazil ties evoke a lot of interest, but not much has been pursued academically. The literature comprises more on the multilateral forums in which both the emerging nations are its members. Stuenkel1, Antonio & Alden2, Hurrell & Sengupta3, Cervo4 and Vaz5 are among few scholars who have contributed to the India-Brazil relations and its association in the purview of IBSA and BRICS. This backgrounder attempts to comprehend the bilateral relations and its prospects.

    Historical Link

    The connection between India and Brazil is five-century old. The history dates back to the time when Portugal’s Pedro Alvares was on his way to India, and was blown-off course, only to discover Brazil in 1500. He made Brazil a stop-over to finally reach Goa. This led to the Portuguese association between India and Brazil and the exchange of varied agricultural crops and cattle in the colonial times. Interestingly, the bovines in Brazil are of Indian origin. The ‘Ongole’ strain from Andhra Pradesh led to the production of the ‘Zebu’ (Bosindicus) variety known in Brazil as ‘Nelore’.6 This variety corresponds to 90 per cent of the cattle breed in Brazil.7 The fresh embryos are still imported from India to Brazil—the second biggest exporter of cattle beef in the world.8 The plants of coconut and mango, both from India, were introduced in Brazil, and Brazil’s manioc and cashew began to be planted in India.9

     Brazil’s Political Past

    The nature of state defines its society and people. It further sets the order in which relations in an international spectrum needs to be maintained. The conditions that make a state stable or unstable in the domestic front somewhere link the success or failure of its inter-state relations. Brazil is one of those few countries that have undergone varied state regimes. Right from being a Portuguese colony in the 1500s to monarchy, to military dictatorship that later led to a military coup in the late ‘40s, to regaining of economy under the President Juscelino Kubitschek in 1956. And the frequent change of Presidents that again led to the military coup, with Brazil coming under full dictatorship in 1968.10 The repression continued till late ‘70s and in 1979 with the enactment of Amnesty Law, the biggest country in Latin America could finally see certain shades of democracy. However, it was until 1994, when the Brazilian Finance Minister, Fernando Henrique Cardoso, presented “Plano Real”, the country could stabilise and hyperinflation was curbed. This laid the foundation of strong economy and peace was restored in the political arena under the reign of Luís Inácio Lula da Silva in 2002. The re-election of Lula in 2006 followed by Dilma Rouseff in 2011 only holds testimony to the fact that Brazil is no longer a tumultuous state that is mired in intra-state conflicts but a stable, democratic nation. However, it also states the reason as to why Brazil for so long remained an undiscovered land to its outside world.  The diplomatic relations between India and Brazil were established in 1948. The Indian Embassy opened in Rio de Janerio on May 3, 1948 and moved to Brasilia in 1971. Until 1960, not more than 20 Indian visas were issued for Brazilians annually, most of them for diplomats.11

    Shaping-up of Bilateral Ties

    India and Brazil have a history of political cooperation since the 1960s. It has been active on the multilateral forums but the economic relations were dismal till the early 2000s. Like in 1964, India and Brazil jointly articulated positions in UNCTAD (UN Conference on Trade and Development) and G77.12 Even in 1967, both the countries condemned the idea of creating Non-Proliferation Treaty (NPT) and instead insisted on using the money not on arms, but by helping the developing nations to fight poverty.13 The Brazilian policy in the 21st century focused on the idea of reciprocal multilateralism14, i.e. the rules of multilateral order should benefit all nations, and not being merely dictated by the superpowers for their benefit. Emerging from the difficult political past and facing its consequences, the year 2002 for Brazil was proved to be a turning point. Luís Inácio Lula da Silva was elected the President. Though it was the initial phase of stable economy and political transition, the coming of Lula as a President, shaped Brazil not only on the domestic front, but had put it on a global map as well. The 35th President maintained the tradition of formulating and programming foreign policy as a state policy.15 Lula in his entire tenure is stated to have visited around 80 countries.16 India, too, shared similar views on reciprocal multilateralism like Brazil. The essence of this idea was rightly projected when both the countries led the developing world during the trade negotiations over agricultural subsidies in 2003 in Cancun. The unified stance of resistance marked the beginning of a new era in the international relations and hinted at non-accommodation of North-South relations.17 Though, the mutual views of India and Brazil took a stronger hold with the creation of IBSA along with South Africa in 2003. Lula made India “a priority” in his first Presidential speech in 2003, which indicated that his government will take ties with India more seriously.18 India, on the other hand, invited the Brazilian president to grace its Republic Day celebrations by being the chief guest in 2004.19 In the same year, India signed the follow-up to the framework agreement with MERCOSUR, which covered 902 products and it came into effect in 2009.20 Though India stands at the number 10th position for MERCOSUR’s top trading partner in 2012 with mere 1.9 percent share.21 However, India is now considering widening its trade agreement with MERCOSUR. The two countries pursued their stance of negotiating on their terms and not just by what is prescribed by the major powers—came together again to form G4 group. Along with Germany and Japan, the two emerging nations supported each other in order to bid for a permanent seat in United Nations Security Council (UNSC). The bi-lateral relations got a little awry when India signed a nuclear deal with the United States and India being recognised as a nuclear power in 2005.22 This didn’t go down well with Brazil who felt India went against its initial stance of not resorting to nuclear weapons. India went a step further by not signing NPT.  As president Lula da Silva is known for his pragmatic foreign policy and being a negotiator23, he put the conflicting issues on a backburner and embraced the idea of economist Jim O’Neil’s BRIC along with India. The formation of multilateral cooperation of the strong developing economies—Brazil, India, Russia and China in 2009 was touted as the beginning of a new world order. In 2011, South Africa joined the group and the cooperation became unique as a distinct bloc of South. The enlarged geographic reach of the group to cover major continents, and the countries being the big regional players, enhances its relevance and growth. All the five countries are G-20 members. And as of 2013, the BRICS countries represent almost 3 billion people with a combined nominal GDP of US$ 16.039 trillion and an estimated US$ 4 trillion in combined foreign reserves.24 Though BRICS as a group has tremendous potential to grow, it has also received criticism for not having a common vision.25 The upcoming BRICS Summit in Fortaleza, Brazil under the presence of President Dilma Rouseff can prove to be a watershed moment if the member countries finally seal the deal to open the BRICS Development Bank. The bank is pitched to provide an alternative to International Monetary Fund (IMF) to support the bloc’s economies.

    India-Brazil Trade and Investments

    For long, India and Brazil had remained unexplored by each other. The foremost reason being the 14,000 km26 distance it needed to bridge, the unstable polity of Brazil and the lack of political will from both the sides to take the trade relationship further. Brazil has become one of the most important trading partners of India in the entire LAC (Latin America and Caribbean) region. However, India's total bilateral trade (in goods) with Brazil fell to 9.5 billion dollars in 2013 decreasing by 10.7 per cent from 10.6 billion in 2012 (trade in goods and services, though, surged to an estimated US$12 billion).27  Imports from Brazil to India that had grown sharply in 2012 from 3.2 billion USD to 5.6 billion USD fell back as sharply over in 2013 due mainly to reduction in crude oil exports of Brazil. Brazil's share in Indian export market was about 2.6 per cent whereas Brazil's share in Indian imports is about 1.3 per cent.28 Diesel exports by Reliance itself account for more than 52 per cent of India's exports to Brazil, up from the forty one percent of India's exports in 2012. Other top Indian products exported to Brazil are: polyester yarn, chemical products, drugs and cotton yarn. Most of these products registered growth in 2013.
    29

    Top products imported by India from Brazil include crude oil (imported by Reliance, accounting for, in 2013, 51% of total Indian imports or US$1.6 billion); sugar (imported by Renuka Sugar India, at US$ 435 million, accounting for almost 14% of total imports); soy oil imports (US$233 million) and copper (US$240 million).30 Like Petroleum, the top five Brazilian exports to India viz. sugar, soybean oil crude, sulphide copper ores and other copper ores and concentrates; all showed a negative growth in 2013 over the year 2012.31

    1
    2

    Source: India Brazil Relations, Ministry of External Affairs (MEA), India, May, 2014

    The Brazilian investments in India comprise sectors like automobiles, IT, mining, energy, biofuels and footwear. On the other hand, the Indian companies have invested in areas of IT, pharmaceutical, energy, agri-business, mining and engineering/auto sectors. The Indian companies that have marked their presence in Brazil are Tata Consultancy Services (TCS), Wipro, Infosys, Cadilla, Mahindra, L&T, Renuka Sugars, United Phosphorus, Polaris are present in Brazil.32 Indian pharmaceutical laboratories, such as Dr. Reddy’s Laboratories and Ranbaxy, which are big exporters of generic medicines have formed joint ventures and installed factories in Brazil as well.33 The Brazilian companies gaining a foothold in India include Marco Polo (automobiles), Vale (biggest mining company), Stefanini (IT), Gerdau (Steel). According to Reserve Bank of India (RBI), total foreign direct investments (FDI) by Indian companies in Brazil from July 2007 to December 2013 have been US$ 103.25 million.34 India and Brazil have also formed a bilateral Trade Monitoring Mechanism (TMM) for periodic consultations. The last meeting of TMM at the level of Commerce Secretaries of two sides took place in March 2012 in New Delhi.35

    Convergences and Opportunities

    Despite the ties between both the countries emerging on a substantive level, there are certain tasks that need to be delved upon. The primary one being the enormous distance that needs to be made more conducive for bilateral relations to grow effectively. At the moment, there aren’t direct flights to reach Brazil and vice-versa and neither bulk shipping routes exist.36 Both the countries are populous with around 1.26 billion people in India (second position in the world) and Brazil stands at fifth position with 0.20 billion people inhabiting the country.37 This brings along the issue of poverty that plagues India as well as Brazil. Brazil’s Bolsa Familia, part of Fome Zero (Zero Hunger) program was proved successful with direct cash transfer and conditional cash transfer scheme under Lula’s reign.38 On the similar lines in India, anti-poverty scheme–Direct Benefit Transfer (DBT) was launched in 2013 that can function through the Aadhar-enabled bank accounts in targeting subsidies.39 However, it is still in its nascent stage of a giving a substantial progress report. Other poverty alleviation programs include Jawahar Gram Samridhi Yojana (JGSY), National Old Age Pension Scheme (NOAPS), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Indira Awaas Yojna (IAY), among others. Due to corruption being one of the major challenges in both the emerging nations, the concrete social policies and programs usually get marred and hinder growth. The Corruption Index Perception, 2013 places India at 94th rank while Brazil betters the position at 72.40 The Human Development Index Report (2013) places India at a staggering position of 136 while Brazil stands at 85th rank.41

    The issues of health, universal education, infrastructure needs to be addressed. With the cooperation of IBSA and BRICS as major platforms, India and Brazil can come up with plans to deal with these issues. Also, the developing nations must comply with Millennium Development Goals (MDGs)42 for their advancement. As India and Brazil share historical relationship that grew from trade and commerce, there are areas where a lot can be learnt from each other.  Brazil is considered to have the oldest, most advanced and efficient ethanol programs in the world.43 At a time when India imports crude oil for around 4 million barrels per day (bpd)44, the alternate use of energy is the need of hour. India can collaborate with Brazil and ethanol’s substitution of fossil fuels to meet its energy needs. India and Brazil hold the similar values on human rights and democracy. Despite being culturally diverse, both the countries have been able to maintain its state institutions on the liberal standards. In international relations where China is seen as a fastest growing economy, India and Brazil can be looked upon as the examples that political freedom is not a roadblock to economic growth.45 Further, both the countries can build a sustainable relationship by putting their soft power into use. There is a huge vacuum in exchange program for scholars, students and civil society institutions. The student exchanges are difficult as there is no agreement to recognize credits from the other country and the visa rules are too cumbersome46. However, Brazil’s visa waiver agreement with Russia shows the fact that if enough political will is exerted, change can occur.47 In that direction, three scientists were deputed by India’s ISRO Telemetary Tracking and Command Netwrok (ISTRAC) to Brazil (Cuiaba &Alcantara) from October 2013 to December 2013 in connection with India’s Mars Orbiter Mission spacecraft tracking activities. ISTRAC had entered into an agreement with Instituto Nacional de Pesquisas Espaciais (INPE), Brazil for providing tracking services through their ground stations located in Cuiaba MT and Alcantara.48 The cultural exchange, too, hasn’t been a frequent affair. The last few years, however, have seen Indian classical dance and music art forms becoming popular in the bigger cities like Brasilia and Sao Paulo. Camihos das Índias, a Brazilian telenovela, launched in 2009 was an introduction to Indian culture and traditions. However, the critiques have stated that it is shown in a poor light.49 This further strengthens the fact that how wide is the gap between India and Brazil soft power relations. It needs to be bridged and explored effectively.

    Conclusion

    India and Brazil are the emerging nations that hold similar principles on democracy, human rights, global governance and liberal strategies. They are partners on the basis of trade relations and have a lot to learn from each other. With their uniting stance on various multilateral and plurilateral forums, the two countries are considered to be important for the creation of a new world order. Both the countries have huge potential to grow bilaterally. However, they require aggressive political will to strengthen their association.

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