India and Brazil to Sign a Bilateral Investment Treaty
Setting aside their differences at the World Trade Organization and other economic forums, India and Brazil are gearing up to enter into a new era of business relationships, which is in the larger interests of both the nations. “Our bilateral relations are based on a common global vision, shared democratic values, and a commitment to foster the economic growth of both countries. Bilateral relations were elevated to a Strategic Partnership in 2006, heralding a new phase in India-Brazil relations,” said the Ministry of External Affairs’ statement announcing Brazilian President Jair Messias Bolsonaro’s visit as the chief guest of the Republic Day celebrations from January 24-27.
According to government officials, India and Brazil will sign a Bilateral Investment Treaty (BIT) and will also exchange a Social Security Agreement (SSA) to permit investments in each other’s pension funds and encourage the flow of investment to help business processes. About 20 arrangements are set to be exchanged, like a Mutual Legal Assistance Treaty (MLAT) on criminal matters, bio-energy or ethanol production and agreements on double taxation avoidance, health, cybersecurity, mining, oil & gas exploration, investment, and animal husbandry.
Considering “nationalist” Modi’s control over India’s foreign policy and the rise of right-wing leadership in Brazil, the two countries hope to build on the relationship between Prime Minister Narendra Modi and President Bolsonaro, who met twice in 2019. Amidst the specter of protests in India over Brazil’s complaint at the World Trade Organization against New Delhi’s subsidies to sugarcane farmers, the two countries are keen to increase defense cooperation, technology sharing, and a logistics agreement. It may be recalled that Brazil is the largest producer and exporter of sugar and Brazil stated that Indian subsidies are a violation of global trade rules.
According to trade observers, both countries have matching interests and technical expertise that could be explored in the fields of nuclear, renewable energy (eg, ethanol), defense, and space technologies. Brazil and India have expanded South-South cooperation in Africa through the South African connection in BRICS and IBSA. The countries also have common interests in the maritime governance of the South Atlantic-Indian Ocean nexus.
A win-win situation for both
In addition to being India’s largest Latin America and Caribbean (LAC) partner, Brazil is a significant regional market, with substantial natural resources and strong expertise in strategic sectors, such as oil extraction, aerospace & defense, nuclear and renewable energy. India’s food security and energy concerns have driven it towards Brazil, especially in the case of biofuels, like ethanol. Brazil has realized the need to reorient its foreign policies towards Asia. In 2016, for the first time, Brazil openly supported India’s bid for membership in the Nuclear Suppliers Group. Bolsonaro, too, confirmed plans for introducing visa-free entries to Indian and Chinese tourists and business persons visiting Brazil to improve intra-BRICS cooperation. India, also, is eager to improve relations with Latin America and the Caribbean (LAC) for its strategic footprint.
Following Bolsonaro’s visit, Brazil is likely to expand its global footprints through the ‘Made in India’ platform. Brazil and India hold strategic defense and technological relationships with Israel, France, and the US, opening several opportunities to strengthen Indo-Brazilian research & development and defense manufacturing. Brazil stands to gain from Indian technical cooperation concerning space technology. India is emerging as a global hub in production and satellite launching; Brazil and other LAC countries have strongly relied on Chinese expertise and satellite launching vehicles. Indo-Brazil tie-up could open cheap space satellite launching options to the LAC nations.
From vying as leaders of the third world to a stronger India-Brazil tie, the bonhomie between the two could affect the world order, given the potential of resource-rich Brazil and the demands of a “rising” India. These two countries have long shared common worldviews.