SPECIAL REPORT
should establish preventive measures, such as agricultural
or industrial safeguards. Agricultural safeguards are an
essential issue for India, as was clear during the WTO Doha
negotiations. Understandings around these issues can produce
dynamic eff ects on other strategic economic negotiations such
as India’s and Mercosur’s advanced negotiations with the
European Union, or their talks in the WTO’s G-20.
The distance between Mercosur and India requires
shared efforts to support infrastructure construction
projects that encourage and sustain the expansion of
trade and business. BRICS´s New Development Bank
and the Asian Infrastructure Investment Bank (AIIB) are
boosting the cooperation and the business opportunities
between Mercosur and India. Indian support for the future
accession of Paraguay, Argentina and Uruguay
uguay to t h e
New Development Bank would increase e the
bank’s investments in sustainable infrastructures
ures
for interregional integration.
The liberalization of trade fl ows between
en
Mercosur and India is fundamental for strength-
h-
ening the complementarities between democ-
c-
racies in the developing world. In trade terms,
rms,
BRICS can be seen as a ‘hub and spoke’ structure,
cture,
where Brazil and India are spokes and China a is the
hub. The strengthening of Indo-Atlantic trade
rade un-
derstandings can be a strategic response to China’s
growing prominence. More trade among large
developing countries can boost our economies s and
strengthen our market position in the global arena.
ellent
In this context, Paraguay could be an excellent
es in
gateway for India to explore businesses
ocked
Mercosur. Paraguay is a small landlocked
mic of
economy, but it has been the most dynamic
the regional block over the last decade. Foreign
companies in Paraguay enjoy a simple tax regulation,
with a reduced amount of tax rates, the lowest import tariff s
on inputs and capital goods in the trade bloc, and the least
bureaucratic business environment among the Mercosur
countries. Also, Paraguay has favorable rules of origin that
allow up to 60% of aggregation of extra-Mercosur origin,
giving foreign companies many opportunities to produce
Mercosur products with a high content of extra-bloc inputs.
Indian companies can find business opportunities in
many sectors in Paraguay, particularly in pharmaceutical,
metallurgical, agriculture, assembly and services. For
example, Paraguayan pharmaceutical companies already
make extensive use of Indian supplies. Indian companies are
associated with Paraguayan companies in joint ventures in
the plastic and pharmaceutical sectors. The direct presence
of Indian pharma companies in Paraguay could expand the
population’s access to generic medicines, also accessing
Mercosur’s broad public procurement market. There are also
opportunities in the steel sector: proximity and low cost of
access to Brazilian iron ore through the Paraguay - Paraná
Waterway and access to cheap and sustainable electric power
generated by the Itaipú and Yacyretá Hydroelectric Plants
make Paraguay an excellent place for production. India’s
Vemarcorp is the fi rst steelmaker to produce recycled steel
in Paraguay and one of the companies that mostly consumes
the economical and sustainable electricity from Itaipú, one of
the largest hydroelectric power plants in the world. Another
sector with great potential is agriculture: Indian companies
producing organic fertilizer and agriculture machinery could
help to raise the productivity of commercial and family
agriculture in Paraguay, a country increasingly aware of the
sustainable environmental challenges of agriculture. In the
service sector, the future Center of Excellence in Information
Technology i in Paraguay will show the potential for
cooperation.
Paragu
Paraguay has a very attractive tax regime for
for
foreign investors to provide goods and services
fr
from Paraguay to the international market:
th
the Maquila regime. In this system, a legally
est
established company in Paraguay, the Maquila
Com
Company, produces goods and/or provides
servi
services on behalf of a company based abroad,
named as the Head Offi ce. The maquila tax regime
can be an interesting tool for Indian investors in
the au
auto parts and electro-electronics industry, as
well as f for service exporters interested in exploring
the possibilities o of a diversifi ed regional market.
Despite all th
these opportunities, Paraguay is the only
country in Merco
Mercosur without a bilateral investment agreement
with India. An inv
investment agreement that seeks an appropriate
balance between the protection and promotion of investment
could become an important framework to better exploit the
business possibilities between both nations. Furthermore,
Vice President Naidu’s visit to Asuncion opened new horizons
for cooperation and business opportunities in strategic issues
between India and Paraguay. For instance, Indian space
cooperation with the new Paraguayan Space Agency and
Paraguay’s access to the International Solar Alliance can
strengthen Paraguay’s technological capabilities while giving
Indian companies in space technology and solar energy
sectors a substantial market advantage in Paraguay.
Just as the opening of the Paraguayan embassy in New
Delhi in 2005 marked a major step in Paraguayan foreign
policy towards Asia, the expectant opening of the Indian
embassy in Asunción will bring the sister nations of Paraguay
and India closer together.
* Author is a Researcher of the Center of Analysis and
Dissemination of the Paraguayan Economy (CADEP) -
[email protected]
PARAGUAY 2019 • 27