India looks for key to Nafta in Mexico

Economic Times (India)

India looks for key to Nafta in Mexico

MAY 17, 2007

NEW DELHI: India is all set to sign a bilateral investment protection agreement (BIPA) with Mexico on May 21. This will be first such agreement with a member of the North American Free Trade Agreement (Nafta). Other Nafta members are the US and Canada.

The agreement is expected to be signed by finance minister P Chidambaram and visiting Mexican finance minister M Eduardo Sojo Garza-Aldape in New Delhi, sources in the government said. It is expected the Cabinet may give its nod to the agreement on Thursday.

The North American trade bloc was created by the North American Free Trade Agreement signed on January 1, 1994. The grouping initially instituted a schedule for phasing out tariffs to encourage free trade between the three North American countries. Today, it has become a powerful trade body with strong trading relations with European, African and Latin American markets.

Being part of Nafta and having a large number of important partners including the EU, Mexico offers excellent opportunity for India to go for enhanced market access through investments and joint ventures, an official source said justifying the government decision to further strengthen economic ties with the North American nation.

India has maintained good relations with Mexico. Government leaders of the two countries have met in both the countries on several occasions. A reflection of good relations is the growing India-Mexico trade. From the level of $251 million in 1999, the total trade between the two countries has now crossed $ 1.5-billion mark.

Important sectors with strong Indian exports are engineering goods, chemicals and pharmaceuticals, gems and jewellery, and textiles. Mexican exports to India are dominated by crude and petrochemicals. According to the latest figures, investors of Indian origin have invested over $1.6 billion in over 67 business ventures in Mexico - the scenario dominated by LN Mittal group in steel and related sectors in Mexico. Besides, new joint ventures have recently been signed in pharmaceuticals and IT sectors.

With proximity to the US, the joint ventures would enable Indian companies to increase their presence in the US, the country’s largest trading partner. It’s here the benefits enshrined under Safta would help Indian investors.

source: Economic Times