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Central America Emerges as Strategic Point for India to Enhance Global Influence

© Photo : X/@DrSJaishankarIndia-SICA foreign minister’s meeting in 2023.
India-SICA foreign minister’s meeting in 2023. - Sputnik India, 1920, 08.06.2024
India has extended several lines of credit to nations in Central America and the Caribbean, enabling New Delhi to establish a presence in the region, underscoring its stature as a global actor in executing infrastructure ventures.
Indian External Affairs Minister S. Jaishankar, last week, engaged in a notable phone conversation with his Nicaraguan counterpart, Denis Moncada Colindres, centred on bolstering bilateral cooperation and tackling global matters of shared concern.
This discussion comes after Moncada Colindres' trip to New Delhi in October 2019 and their encounter in April 2023 at the India-SICA (Central American Integration System) foreign ministers gathering in Panama.
India has earmarked three lines of credit (LoCs) for Nicaragua, amounting to more than $67 million, designated to support diverse projects within the power sector.

“India has provided various Lines of Credit to countries in Central America and the Caribbean. Firstly, this positions India as a benefactor, enhancing its influence. Secondly, it yields economic advantages for India, as most of these LoCs facilitate the importation of goods and services from India by buyers in the recipient countries”, Dr Priti Singh, associate professor, Centre for Canadian, US and Latin American Studies, told Sputnik India.

Likewise, “the Exim (Export and Import) Bank of India typically facilitates these lines of credit, inviting Indian companies to apply [for infrastructure development in Nicaragua]. Although the credit lines are designated for projects in Nicaragua's power sector, they often involve Indian firms specializing in power and infrastructure”, Hari Seshasayee, advisor to the Panamanian foreign minister, said, speaking to Sputnik India.
This benefits India in two ways, according to Seshasayee, “firstly, it allows Indian companies to engage in projects abroad, enhancing India's global presence. Secondly, it helps India establish a foothold in regions like Central America and Nicaragua, demonstrating its role as a global player in executing infrastructure projects”.
While India has been pursuing this strategy for the past two decades, the “scale of investment remains relatively modest compared to other international players” in Central America, he noted.

Procuring Pharmaceutical Products from India: Advantages for Central American Nations

However, Singh highlighted that India also believes in the “concept of development 'partnership' — a change from the previous idea of development cooperation. Partnership implies giving equal importance to the country that is receiving the LOC and taking their requirements into account”.
Currently, “China holds predominant influence in the region among Asian countries. With the exception of Guatemala, all SICA countries now recognize China rather than Taiwan”, she added.

“China's trade scale with Latin America far surpasses that of India. In 2022, India's trade with Latin America amounted to approximately $50 billion, marking the highest figure on record. However, China's trade with Latin America stands at around $450 billion, nearly nine times greater than India's trade volume in the region”, Seshasayee pointed out.

Likewise, in August 2023, Jaishankar proposed a four-point plan to enhance economic relations between India and the countries of Latin America and the Caribbean (LAC), suggesting a goal of doubling two-way trade to $100 billion by 2027.

Seshasayee pointed out that “diversification typically arises from practical needs or market dynamics. For Instance, in the realm of pharmaceutical products, procuring them from India proves advantageous for Central American nations”.

This is due to the “availability of these products at an affordable cost compared to purchasing them from Europe or the US. Consequently, this practice aids in diminishing the burden of public healthcare expenses for these countries”, Seshasayee explained.

The Central American region and SICA hold strategic significance “due to their location at a crucial crossroads for trade and security concerns”, according to Singh.

Panama, as a member of SICA, offers “access to a canal vital for international trade. Additionally, Central American countries serve as a pathway for several Indian illegal migrants heading northward”, she noted.

Addressing Illegal Migration: Collaborative Efforts Needed Between Central America and India

Meanwhile, a Ghadames Airlines flight on Tuesday arrived at Nicaragua's Augusto C. Sandino International Airport from Kazakhstan, carrying over 300 passengers of Indian origin.
Earlier this year, a charter flight landed in Nicaragua, bringing over 370 passengers from India. Similarly, another charter flight from Benghazi, Libya, landed at Augusto C. Sandino International Airport, carrying 356 Indian citizens in May.
It's likely that all three flights facilitated migrant movement along "ghost routes", potentially used for transferring migrants en route to the US.

“Unfortunately, there is a lack of cooperation between nations to effectively collaborate on mitigating illegal migration from India. Consequently, these countries have opted to individually intensify scrutiny and impose stricter regulations on Indians seeking entry”, Seshasayee underlined.

India-SICA Economic Cooperation Grows

Furthermore, Indian exports to Central America have exhibited a consistent increase since 2010, reaching nearly US $1.2 billion in 2019.
India's exports to Honduras in 2023-24 amounted to $266 million, surpassing exports to nearby Cambodia in Southeast Asia, valued at $185 million, and to Kazakhstan, valued at $237 million.

Meanwhile, in the fiscal year 2022-23, India's exports to Panama's Non-Colon Zone totalled $314.56 million, reflecting sustained growth in trade between the two countries.

Singh insisted that India is considered important for many reasons — as a vast democracy, it has “consistently provided assistance to Nicaragua in the past. For instance, in 2011, India established an IT sector for training sessions in Managua”. Collaboration has also occurred in areas such as “renewable energy and educational programs through India's ITEC initiative”.

“India is a 'rising' power with a high growth rate that takes the needs of the smaller countries favourably. There is an increasing interest evinced by Indian businessmen in countries such as Panama. The Indian embassy in Panama is accredited to Nicaragua”, Singh added.

US President Joe Biden delivers remarks on his Bidenomics economic plan, at CS Wind, the largest wind tower manufacturer in the world, in Pueblo, Colorado, on November 29, 2023. - Sputnik India, 1920, 22.12.2023
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