As one of the most open economies in Latin America and the Caribbean, Peru has prioritised FTAs to promote export-led growth, fueled by the country’s rich natural resources. Government policies have focused on expanding the country’s network of trade partners and promoting private investment in export-related industries.

In Peru, Indian companies will find trade and investment opportunities in industries such as infrastructure (master-planning for townships and industrial development; water and waste management solutions; urban transport), technology (agri-tech; intelligent transport systems; info-communications technology; e-government solutions), agriculture (agri-business and trading) and education.

Why Peru

Fast-growing economy 

With its rapidly growing industries and burgeoning middle class – projected to account for one third of all households by 2019 – Peru is expected to maintain its position as one of the fastest growing economies in South America. Its GDP growth rate is expected to be 3.8% in 2018, according to the World Bank. After more than a decade of robust growth, Peru is a leader among emerging markets, with its success built on solid fundamentals and a framework of sensible policies. Indian companies can benefit by supporting Peru’s economic development.

Investor-friendly environment 

Peru’s relatively open and transparent investment regime, along with its broad network of Free Trade Agreements (FTAs), has endeared it to foreign investors. Since the liberalisation of the economy in the 1990s, foreign and local investors have received equal treatment under the law.

Ranked third in Latin America and the Caribbean for ease of doing business1, Peru offers investors an advantageous business environment in the region. Along with Chile and Mexico, Peru has also received an A-grade rating by Moody’s Investment Service.

Entering Peru’s market is even easier now that India is an associate member of the Pacific Alliance. The trade bloc’s full members are Peru, Mexico, Colombia and Chile.

Public-private partnerships 

The rising demand for public infrastructure has encouraged the Peruvian government to turn to replica breitling superocean 42 mechanical black dial black rubber mens watch a1736402 ba29bkpt3 public-private partnerships. Legal changes in 2014 have made PPPs less bureaucratic, more transparent, and thus more attractive to foreign investors.

Profiled Industries

Public Infrastructure

Following severe flooding in early 2017, the government unveiled the Reconstruction with Change plan to rebuild infrastructure and re-energise the economy, with an expected investment of over US$7 billion. Several delayed projects to improve Peru’s roads, ports and airports are also expected to resume, boosting construction growth in the coming years.

With Peru’s government actively seeking private investment in infrastructure, Indian companies which specialise in master planning and urban infrastructure will be able to support Peru’s ongoing development. Peru’s Ministry of Economy and Finance expects private investment in the infrastructure industry to grow by 5% in 2018, 5.7% in 2019 and 6.3% in 20201.

Water 

Mining is electricity- and water-intensive. The continued growth of Peru’s mining industry is placing immense pressure on the country’s water infrastructure and creating demand for new capacity. Investment in desalination plants, expansion of the country’s electricity supply, and more reliable transmission and distribution is crucial to both the industry and the wider economy.

With investments surpassing US$4 billion over the past 15 years, the Peruvian government is committed to improving the industry. Indian companies can benefit from this by teaming up with local construction companies to build and operate water treatment facilities. Apart from water solutions, India’s  companies in the power burberry 6049 unisex fashionable jackets industry could also enter the market to meet the mining industry’s growing energy requirements.

Ports and Airports 

Peru’s transport infrastructure spending is expected to rise to US$5.5 billion in 2019.

There are 31 existing land (road and railroad), port and airport infrastructure concessions which represent investment commitments of about US$14 billion.

Projects that have been moved forward include the port of Pisco as well as the Jorge Chávez and Chinchero airports. There are opportunities for Indian companies in providing master planning solutions for further port and airport projects, as well as downstream, in providing operations expertise or solutions.

Information and Communications Technology 

Peru’s ICT industry has seen robust average annual growth of 8.9% from 2012 to 20161, with total spending expected to reach US$2.81 billion in 2019.

With Peru’s government having a long-standing e-government policy, Indian companies can look into providing ICT solutions in areas such as e-government and e-learning.

Agriculture 

Peru’s agricultural industry has retained its positive growth outlook since 2015 and is expected to grow at a CAGR of 4% over 2017-2020. The major agricultural export is coffee, with other important crops including asparagus and avocados.

Indian companies experienced in the trading and processing of agricultural products are well-placed to enter Peru’s high growth agri-business industry.

Trade between India and Peru is growing, with trade crossing the US $1 billion mark for last four  years. During 2014-15, the total trade was US $ 1.41 billion.

However, according to Peru Custom Statistic, trade between India and Peru during the calendar year 2015 (January to December) was US$ 1.559 billion – exports from India to Peru were US $883.26 million and imports by India from Peru were valued at US $676.289 million. During the same period in 2016, according to Peru Custom Statistic, the total trade was US $ 1.69 billion – exports from India to Peru valued at US $766.787 million (a decline of 13.19%) while imports by India from Peru valued at US $929.917 million (a growth of 37.5%). During the first four months of 2017 (January to April), the total trade is valued at US $ 703.475 million (with Indian exports valued at US $224.949 million; imports by India from Peru at US $478.526 million).

India’s main exports to Peru are towers of iron and steel, pipes for oil and gas industry, automobiles, motorcycles and three-wheelers, iron and steel products, polyester and cotton yarns, pharmaceuticals, etc. Main Indian imports from Peru are copper, gold, phosphates of calcium, zinc and lead minerals, fish flour, synthetic cables, fresh grapes, cocoa beans, etc.

Investments: Five Indian companies have currently invested in the mining sector in Peru.  It is estimated that their present investment is to the tune of US $ 30 million.  This will continue to grow every year as the mines reach more advanced stages.  Many more mining companies are in the process of scouting/finalizing the acquisition of mining assets. In addition, IFFCO has a major stake in a large phosphate mining operation in northern Peru. Similarly, Zuari Agro, partnering with Mitsubishi, has a 30% stake in a large rock phosphate reserve in the same area.  Zuari’s investment share in the development of this project will be about US $ 36 million.  Tata Consultancy Services have a sizeable operation in Lima and is increasing its presence in Peru. Tech Mahindra also has a significant presence in Peru after the acquisition of the Israeli company LeadCom.  Indian company Redbus belonging to the Ibibo.com group has acquired majority stake in the Peruvian company Busportal.pe. Reliance has acquired an oil block. All the major Indian pharmaceutical companies have their representative offices or local subsidiaries here.

AJE Peru has opened a subsidiary in Maharashtra, AJE India Pvt. Ltd. manufacturing soft beverages. The operations started in December 2010.  They have invested US $ 15 million so far and plan to increase this in the future.    A major Peruvian company, Resemen S.A.C., which specializes in mining machinery, has opened a subsidiary in New Delhi by the name of  Reliant Drilling Ltd.,  following a major contract it has won from Hindustan Zinc  Ltd. Several other mining services companies of Peru have set up operations in India such as Opermin and AAC Mining Executors Ltd. Lubricants major Vistony has set up a plant near Rewari (Haryana). They have announced another USD 10 million plant in Delhi, the construction of which has already started.

Vehicles, cotton, plastics, pharmaceuticals, fibers, machines, organic chemicals.

According to ITC Trade Map, India has an untapped export potential of USD 817.7 million to Peru. The products with greatest export potential from India to France are Shrimps & prawns, frozen, Diamonds, worked, and Medicaments consisting of mixed or unmixed products, for retail sale. Diamonds, worked shows the largest absolute difference between potential and actual exports in value terms, leaving room to realize additional exports worth $352.0 mn.

According to the ITC Trade Map, India has an untapped trade potential of US$ 817.7 million.

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