Doing Business with Mexico
It was normally felt that Mexico is too far a country to do business with. Not anymore! Bilateral trade between India and Mexico are continuously on the rise with India-Mexico bilateral trade growing to US$8.37 billion in CY 2017, an unprecedented 33% increase against 2016.
The Mexican economy too is showing signs of buoyancy, resulting in retailers within Mexico starting to roll out aggressive marketing strategies that include offering discounts on key products to get customers through their doors. It is worth a remark that despite the re-negotiation of NAFTA and uncertainty that came along the Presidential elections, Mexico has gained significantly in business ranking, going up from 16th to 12th position with an amount of $30000 millions in 2017. Taking advantage of this economic surge, Mexico’s currency (Peso) too has re-emerged from a minimum of 16 months.
In recent years, Mexico and India have come closer and closer in business relations, with sharp spurt in bilateral trade and investment. India-Mexico bilateral trade has grown to US$ 8.37 bn in 2017 (CY), an unprecedented 33% increase against 2016. The trade balance is in favour of India (1.67bn) at the moment. At the same time, about 75% of Mexico exports comprise just one item, crude oil. India imports about US$2.6 billion worth of oil from Mexico and is already Mexico’s third-largest market globally. Since India is the world’s fourth-largest consumer of oil and one of the world’s fastest-growing economies, there is scope to buy much more oil from Mexico in the future to meet its ever growing energy requirements.
FDI inflow from Mexico to India is rising incessantly in other sectors as well. Total FDI inflow from Mexico to India is about US$ 118million since 2000 and it ranks 46th as leading investor country in India (considering only the direct investments). In 2016-17 the investment was to the tune of US$ 18 million. On other hand, India’s overall export to Mexico has increased by 17.09% in 2018 compared to the previous year. All commodity exports in 2018 stood at 1,687.993 million dollars compared to 1,441.629 million dollars the previous year and 1,410.901 million dollars in 2016. Chief commodities include Vehicles (except Railway or Tramway) and parts, etc. that fetched 631.479 million dollars. This was followed by export of organic chemicals amounting to 154.650 million dollars, Nuclear Reactors and its parts amounting to 162.846 million dollars and electric, sound and TV equipments which brought in 116.295 million dollars for the country.
On import front, chief imported items from Mexico include Mineral Fuel, Oil, Bitumen Substance, Mineral Wax, etc. which saw a fall of 43.59 percent in 2018. Despite this fall, items worth 370.630 million US dollars were imported. Electric machinery including sound equipments and TV equipments saw a surge of 60.55 percent in 2018, amounting to imports worth 133.105 million dollars from previous years 82.907 million dollars. Likewise, vehicles (excluding Railway, Tram, etc.) and their parts saw 175.18% surge in demand in India, amounting to a total amount of 45.391 million dollars. Import of nuclear reactors, boilers and related machinery to India also saw a 111.09% growth in 2018 amounting to 55.332 million dollars.
Indian companies see Mexico as a major investment destination with access to NAFTA and Latin America. Several Indian companies have already invested in Mexico in recent years. The three strongest performing areas for Indian investments in Mexico are information technology, pharmaceuticals and automotive sectors. Almost all major Indian IT and ICT companies (TCS, Infosys, etc.) have operations in Mexico. Several Indian pharmaceuticals firms have investments and operations in Mexico. Certain food processing companies and auto parts manufacturers too have recently started manufacturing in Mexico. Indian companies have also invested manufacturing auto parts, tyres, packaging, and electrical items.
India has identified Aguascalientes as a strategic location for further investments in Mexico. In this regard, Indian Ambassador to Mexico met Governor of Aguascalientes who agreed to work for the promotion of Aguascalientes among the Indian companies that are interested in investing in Mexico for better economic growth. In recent past, Indian business has seen rapid expansion in the Bajio region of Mexico.