India, Mexico exploring free trade agreement : Envoy
Live Mint - 8 April 2023
India, Mexico exploring free trade agreement : Envoy
By Shashank Mattoo, Rituraj Baruah
India and Mexico have launched studies to explore the potential for a free-trade agreement (FTA), Mexico’s Ambassador to India, Federico Salas Lotfe, said in an interview. However, given India’s preoccupation with ongoing FTA negotiations with the UK, Australia and other partners, Lotfe stated that the agreement is unlikely to be signed within the next two years. To bolster economic linkages, Lotfe proposed connecting entrepreneurs from both countries while also highlighting opportunities in research on the uses of lithium. Last year, Mexico encouraged India’s Sun Mobility, which builds energy infrastructure for electric vehicles, to expand into Mexico. Ambassador Lotfe stated that joint ventures between Indian and Mexican firms on lithium research should be realized over the medium term.
India and Mexico have a growing economic relationship. Are there any plans for an FTA ?
We got an expression of interest from the Indian side before the pandemic to explore the possibility of a free trade agreement. Now, what has happened is that India has been very busy negotiating other free trade agreements with Australia, the UK and the European Union. So, I would think that the negotiating team of India is quite busy right now. So this has not moved as fast as one would think. But we are at the stage right now of exploring whether having a FTA is something that we’re both interested in. This is in the pipeline. Having said that, I think what is important is that even without a free trade agreement, the trade relationship is a very healthy and growing one. It’s so I would think that if we were to eventually have a free trade agreement, things would move much, much faster. However, I think this isn’t something that is going to happen this year or next.
We got an expression of interest from the Indian side before the pandemic to explore the possibility of a free trade agreement. Now, what has happened is that India has been very busy negotiating other free trade agreements with Australia, the UK and the European Union. So, I would think that the negotiating team of India is quite busy right now. So this has not moved as fast as one would think. But we are at the stage right now of exploring whether having a FTA is something that we’re both interested in. This is in the pipeline. Having said that, I think what is important is that even without a free trade agreement, the trade relationship is a very healthy and growing one. It’s so I would think that if we were to eventually have a free trade agreement, things would move much, much faster. However, I think this isn’t something that is going to happen this year or next.
That may be the case in the future. We have just taken the first step in that direction. The question of investments is open-ended. If companies want to invest in Mexico, they’re more than welcome to. But we’re looking more into the aspect of research into the possible uses of lithium. From there, we would look not so much into the mining and exploitation of the lithium itself but what happens once it is being used in, for example, electrical batteries for automobiles. That is an area where there might be opportunities for investments. Right now, in Mexico, we’re starting to look into the whole question of electric vehicles, which includes work on batteries. But this is a work in progress. The possibilities are there, and we are looking forward to greater collaboration on this.
Apart from research on this new technology, would joint ventures between Indian and Mexican companies also be considered in the long term ?
I would say in the medium term. As I said, Mexico is moving very much into this field. There have been announcements recently of some very significant investments in Mexico. Tesla is going to build a major plant in Mexico for electric vehicles, and some electrical battery companies are also going to start building in Mexico. We have encouraged some makers here in India to also look into the Mexican market. For example, when our Foreign Minister was here (in 2022), we met with Sun Mobility, a company that makes electric batteries and charging infrastructure. We’re encouraging this company to come to Mexico.
With India looking to diversify its energy suppliers and secure its energy security, should we expect to see any energy tie-ups between the two countries or investments by Indian oil majors in Mexico ?
Well, I can tell you that there are some Indian companies that do have investments in the oil sector of Mexico. At the same time, they are part of multinational consortiums. So that is taking place already, and whether there will be opportunities in the future will depend on the actual operational situation on the ground and whether what Indian companies, together with others, can offer will be of interest to Mexico.
On energy security, we are providing India with a large amount of oil. A big chunk of our $10 billion bilateral trade includes this oil trade.
