Answer: Latin American countries (LAC) include countries of Central America and South America. The flourishing relationship between India and countries of Latin America has become a critical element of India’s foreign policy due to following significance:

• Trade: Trade between India and LAC was at an all-time high of US$50 billion in 2022. Overall, if Latin America were a country, it would be India’s fifth largest trade partner in 2022-23.
• Energy security: Latin America, being home to several oil-rich nations, such as Trinidad and Tobago and Guyana, is crucial for enhancing energy security of India.
• Sourcing of critical minerals: Latin America accounts for 40% of global production of copper, and supplies 35% of the world’s lithium. India is working on acquiring mines of strategic minerals such as lithium and cobalt in countries like Argentina, Bolivia and Chile.
• Investment opportunity: India’s total investments in the region are valued at US$16 billion. Also, India is exploring the possibility of investing in the renewable energy sector in the region.
• Indian diaspora and people to people contact: The region has substantial Indian diaspora with strong historical and cultural ties to India. Moreover, Indian philosophy, yoga and teachings of Gandhi have influenced Latinos in the region. These ties hold a crucial place in strengthening and broadening our relations with these countries.
• South-South cooperation: India held the first Voice of Global South Summit, which had 29 Latin American and Caribbean countries. These summits and grouping serve as crucial platforms for identifying common ground and voicing collective concerns.

Despite the good momentum in the relations there are several challenges in the relations such as:

• Lack of regional cooperation: India has yet to formulate a mechanism to deal with the Latin American region. India has good relations with countries like Brazil, Mexico, Chile but other countries lag behind.
• Perception in foreign policy: Latin America was always relegated to the far end of the three concentric circles that drive India’s foreign policy. It belonged to the third circle due to which the relation remained limited in scope.
• Long distance: Latin America is simply too far from India and the lack of robustness in India- Latin America relations has been attributed to this issue of distance.
• Limited trade engagement: Current preferential trade agreements (PTAs) that India has with Mercosur (trading bloc in South America region comprising Argentina, Brazil, Paraguay and Uruguay) and Chile remain limited in scope.
  • Also, India’s annual trade of $30-50 billion with LAC is low compared to China’s $400 billion.

Further, emphasis on comprehensive trade agreements with other countries in the region and supportive role of government can catalyze deeper and more expansive India-Latin America relations.