Mexico offers an amazing market opportunity as large as India

H. E. Federico Salas Lotfe, Hon’ble Ambassador of Mexico to India, discusses ongoing efforts to improve Indo-Mexican ties and the growing interest of the Mexican companies in the Indian market. He also welcomes Indian companies to invest in Mexico to take advantage of the mutual affinity and the huge market potential of the latter via 46 free trade agreements. 

Mexico offers an amazing market opportunity as large as India

IBT: First of all, I would like to know your overall perspective on how Mexico-India relations have evolved. And how do you see this relationship with India, from the trade perspective, especially post-COVID19?

Federico Salas Lotfe: I think the relationship, historically speaking, has always been very positive: we’ve had long standing cultural and even trade exchanges that go back a few centuries. However, we tend to focus on the period since India became independent. Certainly, during the more modern times, we were the first Latin American country to recognize the independence of India, and afterwards we established diplomatic relations in 1950. So, this year we’re commemorating 70 years of diplomatic relations. 

And in terms of bonds, political, cultural, economic, trade, academic, and all other exchanges have multiplied in this past seven decades. In the past ten years, trade between the two countries has gone all the way through the sky. Two years ago, we became India’s largest trading partner after the US in the American region, with a trade volume exceeding US$ 10 billion a year. Last year, it was a little bit less, and we don’t know what the figures for this year will be. 

So, the challenge for the post-COVID19 world is how we can retake the momentum and pursue the trade relationship with a bigger strength, and from an institutional point of view, we have been doing it. At the beginning of October, we have had what we call a high-level meeting or vice-ministerial level meeting between Mexico and India, with a very broad agenda to discuss all economic issues on the table. And it seems that everything’s going very much in the right direction, with a MoU being signed between COMCE and FICCI here in India. 

We also have a couple of other agreements and MoU’s in the pipeline to be finalized, including one on protection and promotion of investments. Moreover, we have to meet some challenges like market access, so that they do not become a burden in the economic relationship. They may be compartmentalized to certain sectors or certain products. 

But overall, I think the perspective looks very good. It seems, at least from the numbers by the International Monetary Fund, that India will experience a somewhat speedy recovery after COVID-19 goes away. As you know, one important development in the past few months, even within the context of the pandemic, is the renewal of the free trade agreement between Mexico, the United States and Canada, which is called the USMCA.

Of course, it has benefited Mexico tremendously as many countries see us as a good platform of opportunities to do business or to invest. So we’re hopeful that things will look bright, eventually, from the first semester of 2021.

IBT: What would you like to say about the prospects of Mexico as a destination for Indian businesses and exporters?

Federico Salas Lotfe: In the regional context, we are the second largest economy in Latin America after Brazil, and the first trade partner of India in Latin America. Very closely linked to that is the fact that we’re in the North American Free Trade Market, which has been, until now, the largest trading block in the world (before the signing of the RCEP). Moreover, Mexico has 12 free trade agreements that encompass 46 countries. 

As an Indian, you may say that “we’re such a big country with 1.3 billion people here and Mexico only has 130 million”. But in Mexico we have access to an equal size of population as that of India, which is 1.3 billion people, through our free trade agreements. 

Many Indian companies are already in Mexico (nearly 100), including the largest ones — like Tata, Mahindra and Uflex — in varied sectors like automotive, fertilizers, IT, pharmaceuticals and more. Regarding pharmaceuticals, even though they are already in Mexico, the other large pharma companies of India would like to have access to the Mexican market. Moreover, steel companies, which are very strong in India have a very good opportunity to access the Mexican market with the new terms of the USMCA. ArcelorMittal is already in Mexico, but a few other large steel companies in India can benefit from this agreement. As you know, we are one of the largest automotive producers and exporters in the world. 

IBT: As far as your business cooperation with India is concerned, would you like to mention some specific sectors where Mexican companies are highly interested to invest in India? What kind of issues do they face, in terms of making such investments? 

Federico Salas Lotfe: Well, we’re trying to encourage Mexican companies to come to India because they have enormous opportunities in this market and economy. India has a broad range of sectors, and we already have representations in quite a few of them. For example, we have Cinépolis, which is in the entertainment business. We also have Grupo Bimbo, which is the largest bakery company in Latin America. Besides this, we have others in IT and more technology-oriented areas.

But we’re also looking at other sectors, certainly in the digital services and space innovation. Regarding innovation, this is a key field where we’re setting up high priority. I think what India is doing —and has been doing in terms of innovation— is very important. That’s something we can certainly benefit from. Mexico has also been doing quite a bit on it. So, I think there’s a lot that we can share, and maybe work together in areas like artificial intelligence and computer science

I think that one of the main issues affecting the presence of Mexican businesses in the world has been our closeness to the American market. It is easier and almost natural, being the neighbour to this very dynamic economy, to set-up shops there, and sort of forget about the rest of the world. But this is gradually changing.

As I said, we already have about 20 Mexican companies established in different moments in India from several sectors, and many others are considering it. I think that eventually they will take the step, especially when they see that Mexican companies are already here, and are doing well. 

Then, of course, there are always concerns about market access restrictions in India, bureaucratic paper-work, etc. But this is where I think it’s very important that when you have bilateral meetings, business delegations can come and see the nature of facilities and possibilities of investment, and of doing business. And I think that the more openness, transparency and communication we have, the more the presence of Mexican companies in India will increase.

IBT: Is there some mechanism you are considering specifically to ensure connect for businesses from both sides, specifically for small and medium enterprises in India and Mexico?

Federico Salas Lotfe: We would certainly love to have more small and medium enterprises doing business. Some of them are doing it. And you know, this is not an unusual situation, we have some smaller Indian companies already in Mexico. And I think the potential is there but, of course, we need to overcome the lack of mutual knowledge to do investments. 

However, I’ve always wondered why would an Indian businessman think that Mexico is distant? Companies here are enthusiastic about doing business with USA, even though it’s just as far. Again, it’s a question of perception. Mexico is best suited for setting up a base.

We not only have a suitable geographical location, but also a trade agreement with the US, and we can provide many advantages in terms of incentives to companies —from state to state to localities. We have to get into the specifics of that, but we have a very capable and trained working force that’s cheaper than that of the US. 

IBT: India and Mexico have recently agreed on enhancing the “Privileged Partnership” in the 8th Mexico-India Joint Commission Meeting. How will this impact bilateral relations and what are the key sectors that could be benefitted on either side?

Federico Salas Lotfe: We established the privileged relationship back in 2007. Now, we are working on upgrading it to a “Strategic Relationship”. In order for that to happen, we need to have the two heads of government and a State meeting. It could be a virtual meeting, which is something we are working on. 

This will give us better access and a higher level of contacts between Indian and Mexican authorities. Certainly, we will try to expand the nature of the trade in terms of products as well as the footprints we have in each other’s countries. 

We are moving into areas such as aerospace, automobile, auto-components, and of course oil and gas; as you know, we’re a large exporter of oil to India. Other fields include machinery and steel. And, again, I want to emphasize, steel is a sector where Indian companies can benefit from investing in Mexico. 

But certainly, there are other areas like tourism. For example, Indian weddings are taking place in places such as Cancun and other resort areas of Mexico. And I don’t have to tell you this, but Indian weddings are very lavish and take place over a few days. So, that is an important attractiveness. And more and more Mexicans are coming to India. 

Just before the lockdown, we thought that we just had a few Mexicans residing in India or doing tourism, education, etc. But as the lockdown began, these people started contacting us because they wanted to go back to Mexico. It turned out that there were close to 300 Mexicans here for different purposes, including meditation and yoga. So obviously, distance is not an obstacle for this to happen.

Just before the pandemic, we were working on connectivity between the two countries. It’s difficult to have direct flights due to the distance. We’re working on a codeshare agreement with Aeroméxico so that an airline can fly, say, from Delhi to Paris and connect further with Aeroméxico to Mexico. You could check-in your luggage departing from India, just once, for all the itinerary. As soon as commercial aviation returns again, we intend to take that up again. 

As you know, we have facilitated the visa access to Mexico quite a bit. I mean, nowadays, if you have a US, Schengen, Japanese or Canadian visa, you can go to Mexico without any visa. Moreover, if you come to the Embassy of Mexico in India for a visa, and if you fulfill all the requirements that are in the web page of the Embassy, you get the visa the very same day. 

IBT: How is India as a country or as a brand perceived in Mexico? And is there anything you would like to tell Indian companies about the business environment in Mexico, some do’s and don’ts?

Federico Salas Lotfe: I think we’re very similar in many ways. And Indians are perceived in a very positive light in Mexico. We talked about Indian restaurants, and that’s an important thing, though I wish we had more Mexican food here in India. In Mexico, we’re tremendously proud of our cuisine: it has been recognized by UNESCO as an intangible world heritage, and we’re both countries with fantastic civilizations, sharing almost an equal number of UNESCO World Heritage Sites.

So, in Mexico, I think people are far more aware of India in many aspects like your culture and your food. Last December, India was the guest of honour in the Guadalajara Bookfair: this is the largest book fair in Spanish-speaking countries and the second largest in the world. And being the guest of honour, not only did we have Indian writers and publishers coming there, but also dance troupes and singers. They were there for the nine days of the book fair and went touring in different parts of the country, with enormous success all over the place. People are very attracted and read Indian authors. Of course, all of them are translated. 

As far as the business environment is concerned, I would recommend to business people to come and try us, there’s nothing to be afraid of. If we talk about the do’s and don’ts, I would probably just focus on being aware of what the regulations and incentives are, what you’re not supposed to do in terms of setting up a company, etc. that we can inform you at the Embassy. But otherwise, our two cultures are surprisingly very similar with a great deal of affinity and disposition for friendliness.

HE Mr. Federico Salas Lotfe has a BA degree in Government from Harvard University and Master’s studies in Political Science at El Colegio de Mexico. He is a career diplomat who rose to the rank of Ambassador in 2000. His past roles include:

  • Deputy Director General for United Nations Affairs (1983-1988) and Director General for International Organizations (1988) at Ministry of Foreign Affairs, Mexico.
  • Adviser to the Minister of Foreign Affairs (1988-1989).
  • Head of Political Affairs, Mission of Mexico to the United Nations Organization (1989-1993).
  • Head of Political Affairs and Relations with the Congress, Embassy of Mexico in the United States of America (1993-1998).
  • Director of Policy Planning and Chief of Staff to the Minister of Foreign Affairs (1998-2000).
  • Ambassador of Mexico in the Czech Republic (2001-2007), Israel (2007-2015) and Indonesia (2015-2017).
  • Permanent Representative of Mexico to the United Nations Organization for Education, Science and Culture (UNESCO) (2017-2019).
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Broker Reviewfx
Broker Reviewfx
8 months ago

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