Latin America has received a total of 116 billion dollars of sovereign credit from China in the last two decades.
Recipients as follows:
Venezuela 59. 2 billion dollars
Brazil 32.4 bn
Ecuador. 11.8
Argentina 7.7
Bolivia 3.2
Mexico. 1.0
Costa Rica 533 million
Cuba 369 m
Peru 50 m
These loans were given through China Development Bank (CDB) and Export-Import Bank of China (Ex-Im Bank). The recipients were Latin American governments and state-owned enterprises.
The Chinese credit has played a critical role in boosting their exports to 242 billion dollars in 2023 and investment of over 100 billion dollars in Latin America. The Chinese imports from the region were 242 billion.
India’s lines of credit to Latin America is less than half a billion dollars. Obviously India is not in a position to match the Chinese credit. However, the government of India could consider substantially increasing credit to Latin America. During the Prime Minister’s visit to Brazil for the G-20 meeting, India could consider announcing a line of credit of at least half a billion dollars to Latin America. In this context, it is a welcome news that EximBank of India is going to open an office in Sao Paulo, Brazil in the second half of the year.
Increase in credit will help the Indian exporters and investors in the region. India’s exports to Latin America were 19.15 billion dollars and imports 23.75 billion with a total of 42.9 bn in 2023-24 (financial year April-March), according to the Commerce Ministry of India. Major export items are: vehicles, chemicals, pharmaceuticals, textiles, equipment and machinery, There is scope to increase India’s exports to 50 billion dollars in the coming years.
Indian companies have invested over ten billion dollars in Latin America in sectors such as energy, agrochemicals, pharmaceuticals, IT and autoparts. Indian IT companies employ around 40,000 Latin Americans to service their clients in North America and Europe besides local ones. The largest Indian agrochemical firm UPL does more business in Latin America ( close to 2 billion dollars) than in India where their turnover is around a billion dollars.
Latin America is contributing to India’s energy and food security through supply of crude oil, edible oil, pulses and fruits. The region has substantial quantity of reserves of lithium, copper and other critical minerals which would be needed by India for its renewable energy agenda.
Indian companies are not allowed to bid for IDB projects since India is not a member. Indian project contractors have started getting projects in the region in recent years. For example, Kalpataru Projects International Ltd has got almost a billion dollars of power transmission lines contract in the region. These include a single contract of 430 million dollars in Chile. There is definite scope for more such contracts through IDB, if India becomes a member of the Bank.
Source of data on Chinese credit to Latin America:
