India and Mexico's political scenario

INDIA AND MEXICO'S POLITICAL SCENARIO:

Introduction:

India is one of the largest functioning democracies in the world. As an integral part of this huge parliamentary republic, millions of its citizens, by the constitution are granted decree/rights, the responsibility to govern themselves through their elected representatives; not by any means a small task. This parliamentary exercise is conducted through agencies formed of citizens who group themselves according to the ideology presented to them. Thus, these like-minded group or associations or political parties from amongst whom are elected the peoples' representatives to the highest offices in the country, exercise their rights, implementing one of the most important pillars of any functioning democracy. It is believed that in the developing states, over a thousand parties following different ideologies have been found to be functioning within the framework of the democratic setup as envisaged by the opening of doors to a democratically run state. Some of these political parties have had a long run and an equally long history behind them. Among these is India's Congress Party, founded in 1888; Mexico's PRI (Institutional Revolutionary Party) founded in 1929 and Africa's African National Party founded in 1912.Others are relatively new; what with the changing international political environment propelling these aspirants of change, towards an inclination of the state towards a democratic form of governance.

After gaining independence in 1947, the Indian political scenario, overshadowed by those political parties, namely the Congress Party, which was volubly involved in the independence struggle, hence was perceived by the people to be harbingers of independence. Likewise, Mexico's PRI, a strong political party rose to prominence on its widely accepted ideology of bringing about a social revolution and hence gained a large enough support to bring it to power as the centre of politics in Brazil. Both India's Congress Party and Mexico's PRI followed a protectionist economic policy initially, building firmly on the internal resources of the countries, at the same time nurturing and shielding the domestic market from the influence of foreign competition.

This continued up to the eighties, when, with increase in education and an acceleration of awareness, parties based on regionalism, caste and creed began to spread as far as the remotest area of the country. This was a clarion call for the next chapter in the political history of a functioning and thriving democratic state; that of the process of widening of democracy in the Sovereign state of India. From this, sprang a sense of competitiveness which developed and brought to the fore the multiparty system, giving an air of competitiveness to the politics, in the process of which, satisfying a basic tenet of democracy. This was an increasing trend in the developing countries including Costa Rica, Jamaica, and Sri Lanka among others. On the other hand, in Latin America, some credible examples of two party systems, but limited was effective in Costa Rica and Columbia; extreme pluralism in Brazil and Peru. Then again, the earlier class based ideological distinctions were losing ground to the increasing spirit of competitiveness in politics that was tending towards support based on caste, religion, the ethnic or even on regionalism or the linguistic factors. Both India and Latin America were those developing states that were facing, slowly but surely, such adaptation. Of special note, are India's Telugu Dasam Party (TDP), which represents the Telugu speaking people and the Dravida Munnetra Kazagham (DMK) representing the Tamil speaking electorate, an explicit example of linguistic alignment.

However, India epitomizes the complexities of political parties, their social ties and its role in political change. This is intensified by its federal system and its social structure, with continuing relevance for pattern of party support. The Congress Party, which remained electorally dominant at the national level into the late 1980s, drew support from all sections of society, though analysis has shown that at state or provincial level, it rested on particular, and locally varying, caste groups. The Bharatiya Janata Party (BJP) as a Hindu nationalist party obviously seeks to appeal in general terms to the 83 per cent of the population who are Hindu, but its original support base was amongst the upper castes and northern 'Hindi heartland'. But the 1990s have also seen the formation of state-level parties based on particular caste blocs, notably the Bahujan Samaj Party (BSP) in the state of Uttar Pradesh, whose support comes mainly from the dalits or 'untouchables'. [Burnell & Randall : Politics in the Developing World. Oxford University Press, 2005.]

It was during the late 80s and early 90s that the multiparty system took deep roots, spreading its tentacles into even the remotest rural area down vertically to the grass root level, the Indian village. At the centre, the federal government realized the advantages of sharing power, as practiced in thriving and prosperous Belgium, was an eye opener for the world at large especially for the developing countries. The BJP, under the leadership of the then Prime Minister Atal Bihari Vajpayee, was instrumental in taking two very important steps which had far reaching consequential affects on the Indian Economy. The first was to put into motion, the once defunct local self-government bodies, empowering them with decision-making and economic independency in their jurisdiction, thereby imbibing the very spirit of local self- governance. Political compulsions made the two largest parties on the Indian political scene, namely, the Congress Party (a majority stake-holder in the United Progressive Alliance, UPA, joined hands with state/regional parties and the BJP (the majority in the National Democratic Alliance, NDA) form their own groups in joining hands with local/state parties to be at center of governance. Realizing that the country was ripe for openness and the home market ready to face the challenges of the international market, the then NDA government took the second major step toward, a step that could be termed as 'perestroika' of economy - - - the liberalization of economic restrictions. [Burnell & Randall: Politics in the Developing World. Oxford University Press, 2005.]

Similar changes were taking place in the political perception of the people of Latin America in the swiftly shifting ideas towards the democratic form of governance. In Mexico, the Institutional Revolutionary Party (in Spanish: Partido Revolucionario Institucional or PRI[1]) was taking bold steps towards a sustainable economy. The party, known for its socialistic ideas since it early days of inception, was constituted when all factions and generals of Mexican Revolution, in the late 1920s, joined hands to form a single party, the National Revolutionary Party (NRP). Since then, the NRP has been putting their ideals into effect and creating a strong home economy, just like India - - - free distribution of land among the farmers and peasants, nationalization of the energy industry, encouraged the growth of social security as well as labour unions and the protection of the national industries. Later, this party came to be known as Mexican Revolution Party and finally was given its present name, the Institutional Revolutionary Party. However, in time the governance was, as some political pundits would say, an electoral authoritarianism as the party resorted to any means to stay in power, which at least resembled a bastion of a constitutional government against a background of coup d`etats and military dictatorships active in Latin America. [Source: Efemrides del PAN]

However, this system started to show the strains of the symbolic reforms to the electoral process resulting in the composition of the Congress of the Union incorporating proportional representation of seats, though limited in number, to opposition parties in the Chamber of Deputies. Like in India, minority parties became involved gradually demanding changes, which subsequently, resulted in full democratic representation and the honour of the first state government to be won by an opposition part went to Baja California[2] (1989). The watershed in Mexican politics was the presidential elections held in 1988. For the first time in 70 years, the ruling PRI faced a serious threat by an opposition candidate. Nonetheless, the PRI bound back to strength in the presidential elections of 1991, having wielded power in the countryunder a succession of namesfor more than 70 years. The PRI is a member of the Socialist International as is the rival Party of the Democratic Revolution (PRD), making Mexico one of the few nations with two major, competing parties, a part of the same international grouping. By the 1997 mid-term elections, no party was able to secure a majority in the Chamber of Deputies and unable to ward off the winds of change, the first opposition party President, Vincent Fox, was elected and sworn in 2000. At the forefront of the changes brought on by democracy is the end of single-party political control under the Institutional Revolutionary Party (PRI). Since this development, the leaders of Mexico's major political parties have acquired unprecedented levels of power, and in a sense have become the owners of Mexican politics. (Luis Rubio, President of Mexico's Center for Development Research, in a discussion: April 17, 2008).

However, the 2006 election demonstrated the paramount social and political fissures that exist within Mexican society. "The biggest divide facing Mexico today lies between those that accept gradual institutional solutions as a means to advance and those that would rather resort to violence and other non-institutional means to further their cause. He clarified that this does not strictly point to the PRD, though known for its radical politics. Rubio stated that this trend of radicalization is also visible in unions, organized crime cartels, and guerilla forces. The divide between those who support and oppose institutional solutions is a relevant, far-reaching challenge that can lead to paralysis on both ends of the spectrum." (Luis Rubio, President of Mexico's Centro de Investigacin para el Desarrollo, in a discussion: April 17, 2008)

In its neigbourhood, India, with its vast resources and advancements in science and technology, has been active on the principles and beliefs, as stated in its foreign policy, the foundation of which were laid during the freedom movement, when our leaders, even when fighting for independence, were engaged with the great causes of the time. The principles of India's foreign policy, that emerged then, have stood the test of time: a belief in friendly relations with all countries of the world, the resolution of conflicts by peaceful means, the sovereign equality of all states, independence of thought and action as manifested in the principles of Non-alignment, and equity in the conduct of international relation.

India was the founder member of the Non-aligned Movement, playing an active role in strengthening the Movement and making it an effective voice in representing the collective aspirations and interests of the developing countries on such vital issues as development, peace and stability. India hosted the 7th NAM Summit in New Delhi in 1983. In recent years, after the end of the Cold War, India's foreign policy has been focused on strengthening the Movement by redefining its priorities in keeping with the changing times. (Source: Introduction of India's Foreign Policy, Embassy of India, Washington D.C)

In the same vein, the principles of Mexican foreign policy are respect for international law and the judicial equality of states, respect for the sovereignty and independence of nations, non-intervention in the domestic affairs of other countries, the peaceful resolution of conflicts, and the promotion of collective security through participation in international organizations. Mexico supported the Cuban government during the 1960s, the Sandinista revolution in Nicaragua during the late 1970s, and leftist revolutionary groups in El Salvador during the 1980s. Mexico's role in international affairs was limited until the 1970s, mainly because of the country's need to concentrate on domestic issues, particularly on internal stability and economic growth.

The discovery of vast petroleum reserves during the 1970s, however, placed Mexico in the forefront of oil producers and exporters. Mexico soon became the principal supplier of oil to the United States after the 1973 energy crisis. The heavy inflow of dollars contributed to changing Mexico's perceptions of its role in world affairs while increasing its potential of becoming an important regional power. Mexico has maintained an independent oil policy, however, refusing to join the Organization of the Petroleum Exporting Countries (OPEC) during the 1970s, but participating in the Organization of Latin American Petroleum Exporting Countries (OLAPEC) during the 1980s. (Ref: U.S Library of Congress: Foreign Relations - Mexico).

Marching with the changing times, India, in the East has been the force behind an upsurge in bilateral free trade agreement (BFTA). As of now there are many as 38 such agreement outside south Asia, the most recent ones being Singapore-Japan and Singapore-new Zealand BFTAs. In addition, several regional grouping have developed bilateral trade linkage with non-members. In south Asia also there has been a surge BFTA. India and Bhutan have BFTA since fifties. A BFTA between India and Sri Lanka become operational in March 2000. India is currently contemplating similar BFTA with Bangladesh and Maldives. Recently there have been initiatives to establish BFTA between Sri Lanka and Pakistan, Sri Lanka and Bangladesh, Nepal and Sri Lanka, and Nepal and Bangladesh. (Ref: The document Preeti Sent.)

On a wider scale and keeping in tune with the fast paced political and economic changes, India was the founding member of the South Asian Association for Regional Cooperation (SAARC) was established when its Charter was formally adopted on December 8, 1985 by the Heads of State or Government of Bangladesh, India, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka. SAARC provides a platform for the peoples of South Asia to work together in a spirit of friendship, trust and understanding. It aims to accelerate the process of economic and social development in Member States. (Source: www.saarc-sec.org)

India in partnership with the Association of South East Asian Nations (ASEAN), since its beginning about a decade ago, comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam has been developing at quite a fast pace. India became a sectoral dialogue partner of ASEAN in 1992. Mutual interest led ASEAN to invite India to become its full dialogue partner during the fifth ASEAN summit in Bangkok in 1995. India also became a member of the ASEAN Regional Forum (ARF) in 1996. India and ASEAN have been holding summit level meetings on an annual basis since 2002. India signed a Free Trade Agreement (FTA) with the ASEAN members in October 2009 in Thailand. Under the ASEAN-India FTA, the ASEAN member countries and India will lift import tariffs on more than 80 per cent of traded products between 2013 and 2016. (Source: India News, April 2008).

The rapid integration into world markets by six of the largest non-OECD economies (Brazil, Russia, India, Indonesia, China and South Africa, together known as the BRIICS) was an important component of globalization. Economic incentives across world markets and in the BRIICS in particular, have been aligned more closely with countries' and businesses' genuine strengths. Entrepreneurs gained from access to larger potential markets for their products and consumers gained from access to a wider variety of less expensive products.(Ref: OECD Policy Brief March 2009/ www.SourceOECD.org)

CONTEXT OF THE INDIA-LATIN AMERICAN RELATIONS

Latin America and India are not only in different neighbourhoods, as it were, but have also been members of different clubs. In addition to the considerable distance between South Asia and the Western Hemisphere-- a major obstacle for the development of trade, tourism and other exchanges -- they have also been part of very different international groupings. India, of course, was a founder and leader of the Non-Aligned Movement (NAM), a largely Afro-Asian lot, of which very few Latin American countries were full and active members.[3] The latter have tended to stick to themselves in various regional bodies, and even those few, which in the nineties, joined entities such as APEC in an effort to build bridges across the Pacific, did not run into India there. What used to be called the British Commonwealth has been another significant reference point for New Delhi, albeit one where, almost by definition, no Latin Americans are to be found[4]. Literature, of course, embodied in such giants of twentieth century writing as Pablo Neruda, Octavio Paz and Rabindranath Tagore has provided a bond of sorts, but economic links have been harder to forge.

The inward-looking, import-substitution development strategies (ISI), followed both by most Latin American countries and by India from the fifties to the seventies, were not exactly conducive to trade diversification, bringing about a Latin America's debt crisis in the eighties, that put paid to hopes of any such thing happening then. In the early nineties, trade between India and Latin America was negligible [5]. Yet, the moment these two regions started to open up, the volume of trade increased significantly, with Indian exports increasing eleven times in the course of one decade. By 2004, inter-regional trade had reached U$ 3 billion, a lot better than the meager U$ 475 million of 1991-1992, but still a very modest amount. In 2003, in fact, just one Latin American country (and not even the biggest one), Chile, exported more to China (a little over U$ 3 billion) than all of Indo-Latin American trade put together, and the figures on Chinese-Latin American trade had reached U$ 30 billion by then, ten times more than trade with India. Despite the considerable progress made, then, much remains to be done to unlock the full potential of Indo-Latin American relations. (Beyond Neruda and Tagore: The Challenge of Indo-Latin American Relations: Jorge Heine, Ambassador of Chile to India and Sri Lanka)

India's trade with the region is quite limited in relative terms. Nevertheless, it has been increasing significantly during the past few years. India's exports to the world have grown in nominal terms during the past five years by 24.6%.6 During the last year, exports totaled US$ 183.084 billion. When compared with US$ 75.386 billion that were exported during 2004, we can have a clear idea of the dynamic growth of the export sector in India during this period. Only 3.2% of the total exports of this country have Latin America and the Caribbean as its final destination. During 2008, the total amount of exports to the region amounted to US$ 5.898 billion. Even though these figures do not appear to be greatly significant[6], India's growth in its trade with the region has been quite important. As evidenced in Chart 15 - which shows both the performance of Indian exports to the region, and its imports from Latin America and the Caribbean - the increase in trade exchanges with our region has been quite significant. The growth rate of Indian trade with the region has been higher than the growth rate of the general trade of the Indian economy. Hence, the relative weight of exports of India to the region has increased during the past few years. In 2004, Indian exports to Latin America and the Caribbean accounted for 2.4% of the total foreign sales of India. In turn, during 2008, this figure grew to 3.2% of the total reported.[Direction of Trade Statistics (DOTS) published by the International Monetary Fund.]

India's trade with Latin America and the Caribbean is not only quite limited in relative terms, but it is also highly concentrated in some countries. If measured by Indian exports to the region, the first six destinations concentrate 86% of total trade. By 2008, the countries were as follows: Brazil, Mexico, Colombia, Argentina, Chile and Peru. When measured by the origin of its imports, the degree of concentration of the first six countries of origin is even greater. By the year 2008, 94% of the imports made by India from the region came from the same group of countries. It is no wonder then, that these countries are the same that concentrate on both imports and exports. Undoubtedly, there are certain aspects dealing with their relative dimension or size, although there are also issues related to the trade policy strategy, which will have a considerable weight on the consolidation and/or expansion of economic relations with India.

The exchange between India and the region is essentially consists of primary products and manufacturing products based on natural resources. These two items account for more than 74% of the imports of India coming from its major trade partners of the region and more than 51% of the exports made by India to LAC countries. Among other important exchange items, mention can be made of the following: metals, machinery, cars and transportation equipment, high technology manufactured goods and chemical and pharmaceutical products. However, it must be noted that Indian exports to the region are less concentrated on primary products than the sales of Latin American Countries to the Indian market. An especially interesting case in the region is the exchange of India with Chile. In August 2007, a Partial Scope Agreement (PSA) was signed between India and Chile and both countries are expected to sign soon a Free Trade Agreement (FTA) that foresees more ambitious tariff reductions. This is the first treaty signed between India and an individual country in the region. A treaty had been signed previously between India and MERCOSUR, but it has not been implemented to date. (Source: India's Economy and Relations with Latin America and the Caribbean, printed by Permanent Secretariat of SELA, Caracas, Venezuela.)

In analyzing trade exchange figures between India and Chile, the significance of the impact of the PSA becomes evident. According to the figures of the DOTS, the imports of Chilean products to India increased during 2004 and 2008 by almost 1,000%. As a result, Chile took position number one among the countries in the region exporting to India, displacing Brazil. The exports of India to Chile also registered an important growth that accounted for almost 300%. Based on these figures, we can have a clear idea of the significance of trade liberalization agreements between the countries as to trade creation, and the potential offered by trade exchanges with India.

Whereas India is not one of the major investors in the region - except maybe in the case of Trinidad and Tobago - its presence has been increasing during the past few years. India is a world leader in service outsourcing companies. As a result, it was to be expected that most of Indian investments in the region have been carried out by the main companies that operate in this sector. Additionally, India has important consulting service companies that have gradually started to set up in the region to render services to both the public sector and the private sector. Tata Consultancy Services has been one of the Indian companies with a strong presence in Latin America and the Caribbean. The company was a pioneer in the trend of investments of this Asian country in the region and it paved the way for others when it opened operations in Brazil in the nineties. Currently, this company has operations in Mexico, Argentina, Brazil, Chile, Ecuador, Colombia and Uruguay.[8] It is expected to expand its activities and set up operations in Peru.[9]

In turn, 24/7 Costumer - a company supplying remote customer services - opened operations in Guatemala in the year 2008.[10] Wipro Technologies Ltd. has operations in Mexico and Brazil. This software development firm set up operations in 2007 in Monterrey, Mexico, to service North America and Latin America, and it has a payroll of approximately 1,000 employees.[11] Infosys Technologies also opened operations in Monterrey, Mexico. This company plans to expand its operations in Mexico and Brazil by means of acquisitions. In the case of Brazil, it is expecting to start operations before the end of 2009.[12] Satyam Computer Services Ltd. set up the Satyam Latam Centre in San Paulo, Brazil, to offer services to both Brazil and the countries in the region.[13] Evalueserve -a market research company that also carries out other activities - started operations in Chile in 2007. It is located in Valparaiso and it currently generates 10% of the global sales of the company and hires 6% of its labour force.[14]

Another area where important Indian investments have been made in the region is mining and hydrocarbons. The Indian economy needs to count on stable sources for supply of raw materials, and the region is particularly rich in these resources. This is the reason that has led to many of the major investments and acquisitions made by Indian transnational companies in the region. In the area of hydrocarbons, the major player is Oil and Natural Gas Corporation Ltd. (ONGC). During 2006, ONGC signed an agreement to explore Cuban waters in the Gulf of Mexico looking for oil. This area covers a surface of 4,300 square kilometres.[15] In 2008, this company invested the amount of US$ 356 million to acquire 40% of a joint development with PDVSA in the fields of San Cristbal and Junn, both belonging to the Orinoco Oil Belt. ONGC - together with Sinopec - acquired Colombian oil company Omimex in 2006. This company has proven reserves accounting for more than 300 million barrels and an approximately daily production of 20,000 barrels. Additionally, in 2007, the company was awarded a deep-water block and a shallow water block in the ninth round of the bidding process opened by the Agencia Nacional do Petroleo de Brasil.[16] ONGC - along with the Indian Oil Corporation, Oil India, and Reliance Industries - is thinking about a joint investment in the Orinoco Oil Belt. The investments for this project would account for US$ 16 to 18 billion.[17] Furthermore, the company Videocon Industries Ltd. and Bharat Petro resources - both belonging to the BPCL consortium - were awarded an exploration contract in Brazil for US$ 283 million. Both acquired all of the shares of Encana Brasil Petrleo Limitada that belongs, in turn, to the company Encana and Alberta from Canada.[18] (Source: India's Economy and Relations with Latin America and the Caribbean, printed by Permanent Secretariat of SELA, Caracas, Venezuela.)

INITIATIVE BY GOVERNMENT OF INDIA

Government of India has initiated FOCUS LAC program with a purpose to increase Trade Relations with Latin American countries. This program includes the following:

Enhanced Interaction - With a motive to enhance interaction Government of India and Government of Latin American countries have set up joint commissions, and they are Indo-Argentine Joint Commission, Indo-Argentine Joint Trade Committee, Indo-Mexican Joint Commission, Indo-Brazilian Commercial Council, Indo-Cuban Joint Commission, Indo-Cuban Trade Revival Committee, Indo-Suriname Joint Commission, Indo-Guyana Joint Commission The FICCI/ASSOCHAM to have increased interaction with their counterparts and hold the meetings of the Joint Business Councils(JBCs) at regular intervals. The CII also to have regular interaction with their counterparts in the LAC region with whom they have signed MOUs. Simultaneously, seminars & conferences will be organized within the country for creating awareness on emerging markets of Latin America. (Source: Management Development Program Lecture Series by Ravi Kumar, Visiting Professor, Indian Institute of Trade (IIFT), New Delhi)

  1. The foundation of the PRI. October 13, 2000.
  2. Baja California, sometimes informally referred to as Baja California Norte, to distinguish it from both the Baja California peninsula of which it forms the northern half, and Baja California Sur the adjacent state that covers the southern half of the peninsula. While it is a well-established term for the northern half of the Baja California peninsula, however, its usage would not be correct, because Baja California Norte has never existed as a political designation for a state, territory, district or region.
  3. At the original meeting in Bandung on April 1955, which was to originate the NAM, only African and Asian countries were present, although this changed subsequently.
  4. This, of course, is not valid for Caribbean nations, like those of CARICOM, which are active members of the Commonwealth. The whole issue of Indo-Caribbean relations deserves a somewhat different treatment from those Indo-Latin American ones, especially in the light of the significant communities of Indian origin to be found in the English- and Dutch-speaking Caribbean, particularly in Trinidad, Guyana and Surinam, but also elsewhere.
  5. Trade between India and Latin America in 1991-1992 was U$ 473 million, with Latin America exporting U$ 349 million and importing U$ 124 million from India.
  6. The 2008 figures correspond to the third yearly quarter.
  7. Source: Export Import Data Bank, Department of Trade of India. Classification by the author.
  8. http://www.tcs.com/worldwide/s_america/locations/Pages/default.aspx
  9. http://nuevaspymes.blogspot.com/2008/04/tata-consultancy-services-de-la-india.html
  10. http://www.centralamericadata.com/es/article/home/247_Customer_starts operations in Guatemala
  11. [11] http://www.networkworld.com/news/2007/091107-wipro-expands-into.html
  12. http://www.moneycontrol.com/mccode/news/article/news_article.php?autono=401816&special=highlights
  13. http://www.itnewsonline.com/news/Satyam-Opens-Satyam-Latam-Development-Center-in-Sao-Paulo,-Brazil/9255/8/8
  14. http://india.bcn.cl/noticias/economia-y-negocios/evalueserve-servicios-indios-chile
  15. http://findarticles.com/p/articles/mi_hb5140/is_4_14/ai_n29292744/
  16. http://www.thaindian.com/newsportal/business/ongc-videsh-wins-two-exploration-blocks-in-brazil_1007012.html
  17. http://www.rigzone.com/news/article.asp?a_id=74946
  18. http://www.india-server.com/news/videocon-bpcl-consortium-buys-brazil-3884.html

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