India – Central America: Opportunities for the future

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By Dr. Aparaajita Pandey

Central America has traditionally been overlooked by India when it comes to trade and/or strategy. However, as India begins to expand its approach beyond conventional Latin American partners in the region; the economic and strategic potential seems to have attracted the attention of Indians who are looking at the region with fresh eyes. The recent visit of the Minister of State for External Affairs, Meenakshi Lekhi, to Panama and Honduras is proof of this. While Panama has already received visits from high Indian dignitaries; it was the first time that an Indian minister had visited Honduras.

Central America contains a total of seven nations namely; Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. The nations are geographically smaller than their Latin American nations and are not as endowed with natural resources; however, the region has become strategically important and has a rich biodiversity of fruit. Central America has also managed to take advantage of its small size by combining its power grids to provide stable, cheap and reliable electricity to all countries. The region has also learned that the power of collective bargaining is likely to be in its favor and for the same reason SICA or the Sistema de la Integración Centroamericana or the Central American integration system is becoming increasingly important for the region and for those interested in trade. with the region.

In recent times, trade between India and Central American countries through SICA has increased. The year 2016-17 saw the largest trade between India and SICA valued at USD 2.12 billion. While India’s exports to SICA have increased, the same has not been the case when assessing SICA’s exports to India and hence the cumulative trade figures between the two regions remain relatively low. It is also important to note that like most trade in the world, trade between India and Central America has also suffered from the spread of the Covid-19 pandemic. As the world tries to rebuild itself from the devastation, so are India and Central America. India’s interest in the region and its commitment to building strong relationships with the region are evident from the growing number of high-level exchanges between India and Latin America and the Caribbean as a whole and with the Central America in particular.

There are also attempts to establish cultural and educational ties between India and Central America, when India offered students from the region ITEC scholarships and set up joint research facilities in countries like Panama. While these developments are welcome, it should not be forgotten that the geographical location of Central America also gives it considerable strategic importance.

While the Panama Canal has been important to commercial commerce around the world since its opening in 1914; an attempt is underway to build a similar canal in Nicaragua. An interoceanic canal is being planned and built in Nicaragua, funded by Chinese billionaire Wang Jing. The canal was supposed to be built by 2019, however, the project is far from complete and is hanging in limbo. Nicaraguans are still convinced that the canal will be built; however, this has raised concerns from the United States as the canal is financially backed by a Chinese billionaire, and the plan suggests it would be built at a depth of 500 meters, which coincidentally is also a appropriate depth for submarines. While Wang Jing is of Chinese origin, since he is not part of the governing bodies in China; the financial support cannot officially be qualified as that of the Chinese government.

The growing Chinese presence in the region has become a source of concern for the United States. Nevertheless, this indicates an unexplored trade potential for India. If it is true that the Chinese presence in Central America and Latin America is much larger than that of India; it is also true that there are opportunities for India to carve out a place in the region. This is a great prospect for India as there are no additional conflicts to consider as in the case of the US and China.

Central America could prove to be a tremendous opportunity for trade and strategic ties for India, as well as South-South cooperation and greater cultural cohesion. As India progresses in its engagement with the region, it is imperative that Central America is not left behind.

(The author is an independent political strategist and holds a PhD in Latin American Studies from the Center for Canadian, American and Latin American Studies at Jawaharlal Nehru University.. The opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproduction of this content without permission is prohibited).

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