Why Latin America Is Becoming A Focus For Indian Business?

Craig Dempsey  |

With Indian entrepreneurs looking to expand their businesses in new markets, Asia and Europe may be the first places you consider. However, going further afield and expanding into a market such as Latin America could be the most lucrative and profitable strategy for your business, especially if there is Latin American demand for your products and services.

Below, we speak exclusively to Mr. David Wright, the Chairman of Biz Latin Hub, to discuss the huge opportunities for Indian business investment within the LATAM region.

Why is Latin America a popular choice?

I’d say that one of the biggest reasons why people are choosing to enter into Latin America is because the world is becoming increasingly globalized and saturated, and entering into one or two markets alone isn’t enough to give your business peace of mind or security. You only have to look at the United Kingdom’s uncertain market or Asia’s predicted slowdown to see that the world economy is a pretty turbulent place. If you’ve got your eggs in the wrong basket, then your business is going to suffer as some economies go through a recession or challenging times. By expanding into developing markets where growth is consistent, then you’re going to add an additional revenue stream to your business and bring in additional income, even if demand for your products in India suffers. So number one: financial security.

That’s not the only reason I’m seeing Indian entrepreneurs move into Latin America, though. India boasts more than $50 billion in trade with Latin America and the Caribbean (LAC), and that is on the increase as demand for products and services increases. And President Ram Nath Kovind has been working to increase relations with Latin America, building ties after his vice president Venkaiah Naidu made a foreign visit to Guatemala, Panama, and Peru. It remains to be seen what a new relationship between India and Latin America will look like but it’s clear both sides want to increase trade, so getting started before other businesses will allow you to increase your stronghold on Latin Americans and keep competition at bay.

What opportunities are on offer to Indian businesses?

There are so many! One of the biggest industries where we’re seeing real growth is the gold mining industry in Colombia, with some of the world’s biggest mining companies upping their budgets and spending more on excavation and extraction. Many Latin American countries are rich with natural resources and precious metals that are prime for foreign investment, and Indian mining firms can take advantage of the generous FDI benefits and incentives that are on offer. Some governments run regular auctions to give businesses a chance to grab a slice of the mining sector, whilst there are opportunities for businesses outside of the sector, such as in logistics, recruitment, talent retention, hospitality, marketing, and manufacturing.

Another huge sector where Indian entrepreneurs could benefit would be in the automotive industry. Mexico has a cheap and highly-trained workforce that is ready and waiting to make cars and other automobiles, and Indian businesses, although emerging players in the auto industry are already making waves in the country. Mexico is now the number one country in the world for Indian automobile exports, and with so many trade links and potential for further growth and development, it’s an under-utilized market that Indian businesses should lap up.

Do Latin Americans need Indian expertise?

Totally. There’s a lot that Latin Americans can offer India, but likewise, there is a lot that India can offer to Latin Americans. The territory’s technology sector is growing at unprecedented levels, with more and more citizens purchasing their first smartphones and using the internet to manage their finances, purchase goods and services, and start their own businesses. As an Indian company in the software or IT sector, there are huge opportunities in Mexico and other Latin American markets, particularly for established and experienced Indian software development companies who can add value to Latin America’s growing technology scene.

Setting up a technology company in Mexico would allow you to import your software and services to resell to consumers, and develop custom solutions designed to solve LATAM tech problems. Technology adoption is increasing at a faster pace in Latin America than it is in the United States, so there will be no shortage of new customers should you incorporate.

Are there any success stories?

There are a number of major Indian success stories coming out of Latin America, including the wholesale and distribution firm Vikudha, which now has offices in Brazil, Colombia, Peru and Mexico, and MSN Labs, one of the fastest growing research-based pharmaceutical companies in India, which now has a presence in several Latin American companies. Alkem Laboratories, which reported annual net revenue of around INR 64,312 million (USD 910 million) in fiscal 2018, is also branching out into Latin America, helping the firm to generate INR 18,340 million (USD 259 million) in consolidated revenues from international markets, and demonstrating the need to have a global business attitude.

What advice would you give to Indian entrepreneurs and business owners?

I’m often asked whether it’s worth making an investment in Latin America, and nine times out of ten I say yes. Of course, not every business is going to become a million-dollar firm the second they enter into a Latin American country, but with the right business strategy and the right products or services, it’s possible to make a real success of your venture. Having the right team on board, and understanding the intricacies of your target market, will enable you to develop and market your products or services in a way that appeals to Latin Americans.

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Whilst on the subject of appealing to Latin Americans, remember that business culture in Latin America will be very different from that of India’s. As such, it might be wise to partner with a Latin American business expert or swatting up on business culture and formalities, so that you can enter meetings prepared to make the right first impression. Good luck!

DISCLOSURE: I am the CEO and Co-Founder of the Biz Latin Hub

The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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