Obsession with China: India’s ambassador invites Brazil to focus more on his country for agricultural exports

RIO DE JANEIRO, BRAZIL – Brazil needs to do more to find a large market. Apart from this potential, Brazilians could significantly increase exports of high value-added products.

That market is India with its 1.4 billion people, and the statements come from Suresh Reddy, India’s ambassador to Brazil. According to him, the agribusiness industry, one of the pillars of the Brazilian economy, would have much to gain, especially through partnerships in ethanol and digital agricultural technology.

In addition, the Brazilians have an open field in soybean oil exports, an essential product for India, which is the world’s largest importer of this product, averaging 3.5 million tons per year.

Data from Secex (Secretariat of Foreign Trade) show that despite the size and annual growth of the Indian economy, the total trade flow between India and Brazil from January to November of this year was only US$10.6 billion.

Trade flows of US$10.6 billion with India are minimal compared to the US$125.1 billion traded with China during the same period.

While the Indians represent only 4% of Brazilian exports, the Chinese have a 49% share. And one of the products that both Asian countries are most interested in is soy. In China’s case, it is in the form of grain. Indian demand requires a higher value-added product, and that is soybean oil.

For Reddy, Brazil has a prominent place in India with this product. According to Secex, Brazil, the world’s largest soybean producer, exported US$531 million worth of soybean oil to India through October of this year.

According to Argentina’s Indec statistics institute, the Argentines earned foreign exchange of US$2.5 billion from sales to India during the same period.

Brazil, the world leader in soybean production, is expected to produce 144 million tons in the 2021/22 harvest. Argentina, the world’s third-largest producer, will harvest 50 million tons.

According to the ambassador, Brazil needs to look for new business models and upgrade its products. Brazilian industry must take into account the potential of the Indian market.

In recent years, the Indian economy has grown at high rates and is expected to record a GDP (gross domestic product) development of 9.5% in the fiscal year 2021/22.

With the development of the economy, the country currently has a middle class of an estimated 315 million consumers.

Brazil and India also need to expand their partnerships in the sugar-alcohol sector, both private and governmental, especially in the production and use of ethanol as a fuel.

Indians have a strong interest in this area, as ethanol can provide higher income to their 50 million producers in this sector and improve environmental issues.

Brazil has mastered this technology and can bring its knowledge to India in implementing a production and industrialization model.

The Indians, who currently have a 10% share, want to increase this to 20% by 2025. The ambassador said an agreement between Indian manufacturers and distributors would guarantee this increase.

This partnership would also be necessary for Brazil, as India’s increasing use of ethanol as a fuel would add stability to the global sugar chain. India would stop production of 5 million tons.

Expanding Indian participation in the use of ethanol as fuel will increase global demand for flex-fuel cars and pave the way for the adoption of this model by other countries in the region, Reddy said.

There will be an expansion of partnerships with the Indian industry on the Brazilian side, from the assembly of the industrial ethanol model to the auto industry.

In addition to improving producers’ incomes, India would import less oil and increase the share of renewable energy in its transportation model.

The ambassador also said that trade disputes between countries, such as the case of Brazil, Guatemala, and Australia joining the WTO (World Trade Organization) against India, was unnecessary.

The three countries had challenged India’s sugar subsidy policy. The WTO ruling was released on Tuesday (14) and said that India’s level of subsidies to its domestic producers violates the provisions of the Agreement on Agriculture.

With information from Folha