“Mexico is the largest investor from Latin America”

In an interview to THE BLUE MOON Mexican Ambassador Melba Pría speaks on subjects like Free Trade Pria copy copyAgreement with India and the country’s view on UNSC permanent membership.

Figures for bilateral trade with Mexico stood at USD 6.45 billion in 2014, what is your opinion? Is the figure satisfactory? What are the hindrances in the growth of trade? Are there any issues with customs tariffs?

Trade between Mexico and India has been growing rapidly in recent years, however, it is yet well below its potential.

India is one of the most important trading partners for Mexico. There are significant opportunities for both countries to strengthen their trade and investment relationship. Potential sectors include IT, pharmaceuticals, auto-components, mining, chemicals, engineering goods, renewable energy, biotechnology, textile and garments and gems and jewellery.

I believe bilateral trade has the potential to reach 10 billion dollars in the next one or two years, aided by suitable promotion measures from both sides, facilitation for direct shipping, banking and aviation, and a Free Trade Agreement.

The average custom duty (MFN Tariffs) in India is higher than in Mexico, mainly because in 2008, the Ministry of Economy, Government of Mexico, published a decree that unilaterally reduces or eliminates the Most Favoured Nation (MFN) import duties, applicable to 8,357 tariff codes of the Mexican Harmonized System.

Mexican products attract high custom duties in India. We have included this issue in our agenda of bilateral talks related to trade, and we are seeking greater market access for Mexican products.

What were the trade figures in 2015? What do you attribute the fluctuations to?

In 2015, the total bilateral trade was approximately 6 billion dollars. Crude oil is still the major Mexican export to India, followed by iron and steel, ores and metals, electronics, medical instruments, food and beverage, auto parts and other engineering goods.

Mexico’s imports from India, in 2015, jumped to almost 4 billion dollars, a significant increase from the same period of the last year, comprising, inter alia, automobiles and auto parts, base metals, pharmaceuticals, diamonds, textiles and garments, chemicals and petrochemicals, engineering goods etc.

Crude oil prices have fallen dramatically over the past two yearsfrom over $100 per barrel to less than $30. Tumbling international oil prices is the main reason for our trade deficit with India in 2015.

Are there any investments from Mexican companies into India? Why are they hesitating to invest in India?

Let me emphasize that Mexican companies are not hesitant about investing in India; in fact, Mexico is the largest source of Foreign Direct Investment from Latin America to India.

There are 13 leading Mexican companies that have invested more than 800 million dollars in India until 2015. Some examples of these companies are Cinepolis, Mexichem, Kidzania, Metalsa, Nemak, Grupo Kuo, Katcon etc. I believe the trend of increasing investment will continue because Mexican companies see India as promising, not only for the current size of its local market and its future growth potential, but also as a qualified and competitive source of labour.

Mexico supports programmes like ‘Make in India’, ‘Digital India, and others. We see the interest of many Mexican companies’ in sectors like food processing, IT and telecom, auto component, and infrastructure (affordable housing).

This does not reduce our efforts to attract Indian investment to Mexico. Mexico is one of the best places in the world to invest and one of the most exciting markets for doing business, particularly at this moment when so many important sectors have been opened to foreign investment for the first time.

Indian companies have invested substantially in Mexico; what is your opinion on bilateral investments?

Mexico is a preferred destination for foreign direct investment and, according to the FDI Report 2016 by the Financial Times, the leading destination for all FDI projects in Latin America, with an announced inward capital investment worth 24 billion dollars that comprises 351 projects across the year. In this sense, Mexico is proudly open to Indian companies, and it is our commitment to make it as simple and attractive as possible for Indian businesses to set up shop in our country.

Indian investments in Mexico are estimated at 2.5 billion dollars. These include most major Indian IT companies, several pharmaceutical companies, and auto component companies, like TCS, Infosys, Wipro, HCL, Hexaware, Tech Mahindra, NIIT.

Pharmaceutical majors like Sun Pharma, Dr Reddy’s Laboratories, Ranbaxy, Wockhardt and auto component manufacturers like RSB Transmission, PMP Auto, JK Tyre etc. have invested in facilities and plants in Mexico taking advantage of its strategic location, large market and investment friendly policies.

Indian companies are also increasing their presence by making green field investments and setting up joint ventures, attracted by our strategic geographic location, availability of highly qualified human capital, competitive operating cost and free trade network with 46 countries.

Though there are some important agreements between India and Mexico, there seems to fail a free trade agreement or a preferential trade agreement; in that case what are the reasons for not signing a FTA or PTA?

Mexico has a network of 11 FTAs with 46 countries (FTAs), 32 Agreements for the Promotion and Reciprocal Protection of Investments (BITs) with 33 countries and 9 agreements of limited scope (Economic Complementation Agreements and scope agreements partial) in the framework of the Latin American Integration Association (ALADI).

India and Mexico already have a Bilateral Investment Promotion and Protection Agreement (BIPPA) in place to promote flow of investment to both countries and allow free repatriation of funds by investors.

Free Trade Agreement or Preferential Trade Agreement between Mexico and India could be instrumental if our bilateral trade has to reach its full potential. We are therefore open for such a possibility.

Is Mexico being used by illegal migrants, also from India, to travel to the US?

Our country follows a complex migration dynamic that includes origin and destination flows. We have now also become a country of return migration. The Pew Research Centre reports that, although migration from Mexico to the U.S. reached a peak during the 1990s; nowadays, more Mexicans immigrants are leaving the U.S. From 2009 to 2014, 1 million Mexicans and their families returned to Mexico, while only 870,000 Mexican nationals left Mexico to go to the U.S.

That being said, Mexico is the neighbour of one of the largest economies in the world and that unavoidably attracts a myriad of nationalities, including Indians. As readers may know, India now has one of the largest diasporas in the U.S. In fact, according to the Migration Policy Institute, India’s unauthorized U.S. immigration has a growth rate of 306%, the largest among Asian countries. As these communities grow, more and more people will try to travel to the U.S and the reality is that travelling through Mexico may continue to be an option to achieve this goal.

It is important to emphasize that our country does not encourage illegal transit flows from any country, and for these security reasons, we are forced to be extremely cautious to face the realities of our geographical location.

Mexico does not support India’s candidature for a permanent seat in UN Security Council? What is the reason behind this?

First of all, it is important to clarify that it is not that Mexico does not support India’s candidature for a permanent seat to the United Nations in itself. What is important to grasp is that Mexico, as part of the Uniting for Consensus Movement, does not favour having any new permanent members.

In the end, both our countries would like to see something very similar: a more representative UN Security Council. However, we are trying to achieve this through different means. Alongside the G4 (India, Germany, Japan and Brazil), India prefers to have new permanent members in the Security Council and become one of them.

As I mentioned, Mexico does not favour new permanent members. Mexico has proposed that non-permanent members of the U.N. Security Council be elected through a vote of the General Assembly and be given immediate re-election. Mexico has also proposed to reform the U.N. Security Council to increase its number of members to 26. The members should represent all regions of the world, including four countries of the Latin American and Caribbean Group. Mexico and France have proposed to limit the veto power of permanent members in cases of crimes against humanity or genocides and improve the transparency of the U.N. Security Council’s general operations.

During her lecture at the Indian Council of World Affairs in March 2016, Mexican Minister of Foreign Affairs, Claudia Ruíz-Massieu highlighted that Mexico respects India’s aspiration to become a permanent member, but asked: how long is India willing to wait? This has been a long discussion already, and paralysis in the Security Council reform process has only benefitted permanent members. In this sense, Minister Ruíz-Massieu extended an invitation for India to consider the compromise solution promoted by Mexico, as it is a realist solution that could be achieved in the short run, one in which developing countries will have the opportunity to effectively influence the agenda.

I would just like to add that, although India and Mexico traditionally sit on different sides of the room regarding the reform and enlargement of the Security Council, it has never been an obstacle for effective collaboration in multilateral fora between our two countries.

Have bilateral ties become better after the new government took office in New Delhi in 2014?

Certainly, India and Mexico are in an excellent point in their relationship, one filled with opportunity and potential. Since Prime Minister Narendra Modi came to power, awareness of India as a modern country increased worldwide. His international standing has been instrumental in attracting new investments to India. Business oriented policies give clear messages to potential trade and investment partners. I see certain similarities with the recent structural reforms undertaken in Mexico. Our experience might be relevant for schemes such as Make in India. Mexico produces 50% of all advanced manufactures in Latin America and we are the 16th world largest exporter. Regarding Digital India, Mexico has done similarly with the launch of our National Digital Strategy in 2013. It eases access to internet, making the most of it. Also seeks digital inclusion, better informed citizens and a closer, more open and effective government.

I am convinced that this is a new era for India Mexico relations. As I mentioned earlier, we received the visit of our Minister of Foreign Affairs, Claudia Ruíz-Massieu this March, an occasion in which she met with Minister Sushma Swaraj and Prime Minister Narendra Modi. After the UN General Assembly of this year, Minister Swaraj will travel to Mexico to preside over the 7th Mexico India Joint Commission. Afterwards, we are expecting Prime Minister Modi to make a State visit to Mexico during the first quarter of 2017. Through privileged political dialogue, we are driving our ties forward and look towards a 21st century relationship between these two great nations.

Are you satisfied with the visa regime of India? Do Mexican travellers to India face difficulties in getting a visa?

One initiative that has eased Mexican tourism to India has been the E-visa scheme in which Mexicans are able to get a 1-entry, one month duration electronic visa by applying online. This has been a great success among Mexican visitors who can get this requirement processed in a matter of a day or two.

Is there a sizable number of tourists from India to Mexico?

Mexico holds the 9th place among top 10 most visited countries according to the UN World Tourism Organization. Approximately 32 million international tourists visited Mexico in 2015.

Tourism flows from India to Mexico are steadily increasing. Last year, around 50,000 Indian visitors came to Mexico. As India becomes an economic power, more and more Indians are travelling abroad and we are very glad that they are travelling to Mexico and enjoying what our country has to offer. With natural beauties, excellent food, beaches, impressive architecture and a lively culture, Mexico is a very diverse country, which makes it a terrific tourism destination.

We want to do more to promote these exchanges so we try to facilitate immigration processes as much as possible. For example, Indians who hold American visa are no longer required to have a Mexican visa to visit our country. Holders of Schengen visa will have to come to the Embassy, but will immediately get a visa.