Brazil looking to India for new trade opportunities

By
Friday, October 14, 2016

Indian Prime Minister Narendra Modi was due to meet with Brazil's President Michel Temer during the 8th BRICS summit to discuss potential new areas of cooperation between the two emerging economies.

Large Brazilian companies currently operate in India, mostly in the steel and automotive sectors. Among them are Gerdau, the largest long-steel producer in the Americas, and bus and coach body manufacturer Marcopolo.

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Conversely, India's ArcelorMittal, the world's largest steel conglomerate, operates plants in Brazil.

In August, Temer said he recognized the "vital importance" of the steel sector to efforts to revitalize the country's flagging economy. He also affirmed he would make sector demands a priority in terms of policymaking.

Continued weakness of Brazil's steel industry, weighed down by global oversupply of above 700Mt and high levels of debt, was one of the main factors that led to calls for the national government to provide a helping hand.

Brazilian President Michel Temer, left, poses for a photo with BRICS leaders, followed by Indian Prime Minister Narendra Modi, Chinese President Xi Jinping, Russian President Vladimir Putin and South African President Jacob Zuma. (CREDIT: AFP)

TRADE

Temer is expected to return home with an investment facilitation treaty to help ease Indian investment in the South American country.

On Thursday, during a New Delhi meeting between India's commerce and industry minister Nirmala Sitharaman and her Brazilian counterpart Marcos Pereira, both officials expressed the need to strengthen the India-Mercosur Preferential Trade Agreement PTA.

Brazil is India's main trade partner in Latin America. In 2015, bilateral trade was US$7.9bn, down from a record volume of US$11.4bn in 2014.

India's commerce ministry said in a statement: "Mrs. Nirmala Sitharaman mentioned the improvement in ease of doing business in India and influx of huge amount of FDI into India, since the present Government came to power while underlining that the investment from Brazil has been modest and below potential, thereby emphasizing that both countries take measures to enhance two way investment."

BRICS AND STEEL

Among the five BRICS nations are some of the world's top 20 steel producers.

China's steel output totaled 803Mt in 2015, according to data from the World Steel Association. The Asian country is the world's top steel producer, with a 50% share of global production.

India and Russia are ranked three and five, respectively. In 2015 the former produced 89.6Mt and the latter 71.1Mt.

Brazil, which is Latin America's largest steel producer and is ranked eighth globally, saw crude steel output contract 1.9% to 33.2Mt last year.

The BRICS nations are Brazil, Russia, India, China and South Africa.

The summit is being held in Goa, India, from October 15-16.