Paraguay Paraguay-India - Page 27

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) - grojas@cadep.org.py PARAGUAY 2019 • 27