Embassy of India

Buenos Aires

Monthly Commercial and Economic Report forJune 2009

Bue: 101/1/2009 14th July, 2009

Executive Summary

  • The Embassy organized an India Latin-America Business seminar in Buenos Aires on July 2ndon the occasion of the visit of the CII delegation. It was attended by 230 businessmen. The press coverage of the Event in the local Newspaper in English:
  • For the first time ever seminars on business with India and BSM’s were held in Cordoba and Montevideo. The responses in these places were also very encouraging. The delegation had 250 one to one business meetings in all the three places.
  • Indian exports to Argentina in the first five months of 2009 were 125 million dollars (in Jan May 2009 exports were 166 million). Indian imports from Argentina in the same period were 305 million dollars (in Jan May 2008 361 million).
  • Indian exports to Uruguay in the first half were 19.5 million dollars (Jan June 2008 exports were 26 million) and imports from Uruguay were 5 million dollars (same as last year).
  • Indian exports to Paraguay increased by 11% to become 25 million dollars in the first half of the year 2009. Indian imports from Paraguay almost doubled to become 18.5 million dollars in the same period.
  • Argentine Economy grew by 2 % in the first quarter.

Bilateral Economic Relations with India:

A separate report on the Business seminars organized by the Embassy for the CII delegation who visited Uruguay and Argentina from 28th of June to 3rd of July is attached in the Annexure I on page 5.

Bilateral Trade:

India-Argentina: Indian exports to Argentina in the period January May 2009 were 125 million dollars (In 2008 the exports were 166 million dollars) decreasing by 25%, whereas Argentine imports into India were 305 million dollars; lesser than the same period last year (361 million dollars).

India-Uruguay:Indian exports to Uruguay from January to June 2009 were 19.5 million dollars (which is 25% decrease from 26 million dollars). At the same time Indian imports to Uruguaywere 5 million dollars.

India Paraguay- Indian exports to Paraguay from January to June 2009 increased by 11% to reach 25 million dollars (being 22.5 million in the same period in 2008). Indian imports from Paraguay almost doubled during the first half of 2009 reaching 18.5 million from 9.5 million dollars in 2008.

Markets

Government will give loan to General Motors: President Cristina Kirchner announced that the Government will grant loan worth US$ 70 million to General Motors Argentina through ANSES (the pension fund), for the Company to develop and market the new Viva model.

World Bank will give loan worth US$3.3 billion to Argentina: The World Bank approved a US$3.3 Millions loan for Argentina to be paid in three years. The credit will be given in order to face the current global crisis consequences and to make investments in the social field. According to WB's official the credit also represents a help package intended to secure Argentina's long term growth.

Macro Economy

GDP Growth: According to INDEC (The official statistics bureau of the Government) GDP grew by 2% in the first quarter as compared to thesame period in 2008.INDEC has revised down a series of key economic figures in recent months, including 2008’s growth rate which was cut to 6.8 percent from previous 7.0 percent. According to World bank Argentina’s GDP will decrease by 1.5 % in 2009.

Trade Surplus: The accumulated trade surplus for first 5 months was US$ 8,333 Millions surplus an increase of 62% as compared to the same period last year. This is basically because of the decrease in imports due to the tendency of the Argentine Government to restrict imports into the country.

Mining: Australian Troy Resources Company would begin production in Casposo gold and silver mine in Argentina (province of San Juan) in 2010. The development would require an investment of approximately US$ 93 M. The mine is located at 2,400 m over sea level and it has gold reserves estimated of about 400,000 ounces. Troy Resources acquired US$ 20 M worth Casposo gold and silver mine located in San Juan, which was owned by the Canadian Intrepid Resources Company. The construction would begin at the end of the year with an investment of more than $ 350 M

Agricultural Production: The estimates for the Production of Soya for the year 2008-09 has come down from being estimated at 34 million tones to 31.9 million tones in June due to the severe drought which has affected the country since last year. It is 31% less than the production of last year. Also the grain production is projected to decrease by 40 % in 2008-09. The production of Corn is estimated to be 13 million tones.

Agricultural Machinery: In the first fivemonths of 2009, only 204 imported harvesters were sold, 1/5 of the 1,019 sold in 2008. Normally 80% of the harvesters sold in Argentina are imported. With regard to tractors, 1,022 were sold, 35% of the 2,943 for the same period last year. Meanwhile, domestic agricultural machinery manufacturers continue to demand a rescue and to make more efficient the payments of some bonds that operate as subsidies protecting from imported machines. Only 237 imported tractors and 15 harvesters were sold in May.

Automobiles: ADEFA (Argentine Automakers Association) released the following information for May:

a) The domestic production was 2,783 vehicles: +14.8% as compared to April and -23.6% as compared to May last year.

b) Domestic sales at 40,872, 37% national automobiles and 63% imported. They increased 3.4% as compared to April, but are still 31% less than a year.

c) The exports for the month amounted to 26,344 units (+12.8% as compared to April, -11% as compared to last year.)

d) In the first five month accumulated figures, production fell -35.5% as compared to the same period last year, domestic sales, -33.8% and exports -32%.

External Economic Relations:

Argentina-Brazil: For the third consecutive month in May Argentina had a surplus balance of trade with Brazil of US$ 56 Millions.

Brazil will triple its Argentine credits toUS$ 5 Billion: Credit will finance trade between the two countries, and would also are estimated to serve as an additional guarantee to take care of Banco Central reserves. The agreement was reached during the two Presidents meeting last month and it is based on the model of Swap agreed between China and Argentina.

Argentina-Spain: Spain decided to grant a loan to Aerolineas Argentinas to help it to end the negotiations going on since last year. The Argentine President Cristina Fernandez requested the Spanish authorities to do so when she visited Spain in February. The loan will be worth US$ 350 million and indicates willingness on the part of Spanish Government to solve this lingering issue disturbing the bilateral relations between the two countries.

Uruguay

Foreign Trade:In the January-May period, Uruguay imported for a total of US$ 1,925 M and exported worth US$ 2,171 M (-12.8%).

Energy: The President of Uruguay Tabaré Vázquez inaugurated the "Sierra de los Caracoles" Wind Electricity Generating Complex at Maldonado. It is the most modern in the country and it will generate 10 MW. National UTE Electricity Company is also boosting the wind electricity part at Nuevo Manantiales (4 MW), plus 3 biomass projects (10 MWV each).

Distribution: As per list

Eenam Gambhir

Second Secretary

Annexure I

CIIdelegation and Business Seminars at Montevideo, Cordoba and Buenos Aires

29 June to 03 July

In all three places the Embassy organized business seminars and BSMs. The main event was theIndia-Latin America Business Seminar in Buenos Aires on 2 July. The Presidents of India-Brazil Chambers of Commerce and India-Mexican Chambers of Commerce as well as theCommercial Representatives of Indian Embassies in Colombia and Chile and CG, Sao Paulo made presentations.

The message which came out clear and loud in the seminar for the Argentine and Latin American businessmen was the following:

I)Despite the global financial crisis, India will grow at 6% this year and will outgrow China in 2010. This shook the audience out of their gloom and shone as ray of hope.

ii)Although the Argentine economy and Latin American economies are facing a slight GDP contraction this year and the Governments are putting in place a number of import restrictions, the Latin Americans were impressed by the bold and optimistic decision India took to reach out to these markets and organize seminars and visit of delegations even at these times of uncertainty.

2. The above message was reaffirmed by the up-beat presentation made by the Vice President of TCS who talked about the plans of TCS to expand their operations and increase their staff strength from the current level of 5,000 in Latin America. The representative of a non-resident Indian company, Olam in his agribusiness presentation described how his company has been growing rapidly in farming and agro-processing in Argentina and Latin Americaand their future plans for expansion.These real life stories of success and optimism in Argentine and Latin American markets drove home the message to the audience, even more strikingly.

3. The fact that over 200 businessmen attended the seminar is confirmation of the serious interest in India among the local business here. It should be noted here thatdespite the crisis,India’s exports in the first four months of this year to Argentina have gone up to US $ 104 million as compared to US $ 97 million in the same period last year. It is also interesting to note that the number of Argentine visitors to Indiain the period January to June 2009 has increased to 2265 from 2139 in the first half of 2008.These confirm Embassy’s assessment thatin these times of uncertainty and crisis, Argentina and Latin America have started looking at low cost import sources such as India even more seriously than in the past.

4. The Argentine Minister of Foreign Affairs and International Trade had earlier agreed to inaugurate the India-Latin America Seminar. However, at the last minute he had to go to WashingtonDC to deal with the Honduran crisis. Thereafter, the embassy had approached the Minister of Production, who had readily agreed to attend but unfortunately she could not make it since there was an unscheduled Cabinet meeting at the last minute. An Under-Secretary from the Ministry of Production came in her place.

Montevideo: Seminar and BSM – 29 June

5. This is thefirst time that a business delegation from India had visited Montevideo and a business seminar was held there. The response was overwhelming. Despite the thunderstorm and torrential rains on that day, about 150 businessmen attended business seminar and had one-on-one meetings with India delegates. The Minister of Industry, Energy and Minerals of Uruguay gave the keynote address and highlighted the growing importance of India for Uruguay. The Uruguayan speakers in the seminar offered that Uruguay could be a hub for India’s business in South America.

6.The delegation was impressed with the large bonded-warehousefacility of Grupo RAS in Montevideo which is being used by some of Indian companies for distribution of their products in South America. Grupo RAS is offering marketing services for Indian companies in the region. The Embassy announced during the Seminar Embassy’s decision to appoint Mr. Ruben Azar the CEO of Grupo RAS as India’s new Honorary Consul General to Uruguay.

Cordoba: Seminar and BSM on 1 July

7. For thefirst time ever, the Embassy had organized a business seminar in Cordoba,the second largest city in Argentina and this is also thefirst time that a business delegation had visited the city.The Governor of the Province of Santiago de Estero was the Chief Guest and there were Ministers and representatives of chambers of commerce from some of the provinces around Cordoba. The event was attended by over 150 Argentine businessmen.

Follow up:

9.a) This is an ideal time for India to intensify its export promotion and penetrate the Latin American market. At this time of crisis, uncertainty and downbeat mood, the European, American and Japanese companies have shied away from this region. This opens space for entry of India.

b) TheLatin American business and governments with fewer resources atthis time try to conserve foreign exchange by seeking imports from low-cost sources such as India and China.While Chinese products are more competitive in many cases, India has the cultural advantage. The Latin American admiration for Indian culture, Yoga and democracy is influencing the business deals too.

c) India needs to organize trade fairs and other export promotion events and activities even more aggressively this year and next year.The Embassy recommends organization of an exclusive Indian industrial fair in Buenos Aireslater this year or in the first half of next year.CIIhas agreed in principle for this proposal.

d) This is an opportune time for Indian companies to make investment in agricultural land and agribusiness in Argentina, Uruguay and Paraguay as well as in South America. Due to the crisis and the uncertainty, the prices are lower.South America is a major source of edible oils for India. From time to time, we import wheat, sugar and other agro products also. The edible oil imports of India are expected to go up this year to 8.5 million tons from 6.3 million tons last year. The per capita consumption of edible oils is said to have increased to 12.8 kg this year from 11.4 kg last year.To satisfy this growing demand, investment in farmland is a better long-term strategy.The Solvent Extractors Association of India has already made a study on investment here and have approached the Exim Bank for credit. This needs to be facilitated.

Annexure II

Local Inquiry

Date / Name and contact of the Company / Product Area of interest
June 2009 / Mr. Hector Garcia Real
CARLAREN SA
Buenos Aires Argentina
Te: 5411 4805 5305
/ Boilers and suppliers of railways equipments and parts.
June 2009 / Ms Florencia Villegas
RODAZUL SRL
Gualeguaychu 2041 Buenos Aires Argentina
te: 5411 4116 2243

/ Indian exporters of auto parts.
June 2009 / Ana Maria, Co: METALAR
cel: 0381 155882958
/ Sugar industry equipments.

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