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Q: What key factors have contributed to the 48% increase in foreign direct investment (FDI) in Mexico from Indian companies?
A: The notable 48% surge in FDI in Mexico can be attributed to several key factors that make the Latin American country an increasingly alluring destination. First, Mexico stands out among other Latin American countries in terms of its rich culture, which resonates with Indian companies that hold strong family values in high regard. Second, nearshoring holds significant advantages. Mexico's geographical proximity to both Latin and North America proves highly beneficial. Third, Mexico provides a substantial workforce, exemplified by Tata Consulting Services (TCS), Flex Americas (UFLEX) and HCL. TCS employs 12,500 individuals and expects to grow to 26,000 over the next five years. Likewise, UFLEX has announced another investment of US$200 million for the next five years, while HCL has opened another office facility in Mexico that employs 1,600 people. Essentially, the country offers the necessary infrastructure and support to enable companies to fully leverage its advantages. Finally, Mexico facilitates the reinvestment of earned capital, providing an additional incentive for companies.
Q: What specific measures have been implemented to encourage Indian companies to seize the advantages offered by Mexico?
A: The Mexican government has implemented specific measures to encourage Indian companies to leverage the opportunities offered by Mexico, promoting their growth and expansion. One notable measure was the support provided by the now defunct ProMéxico office, which served as a valuable resource for investors interested in investing in Mexico.
However, despite the incentives offered by Mexican offices, the decision to invest in foreign economies ultimately depends on each company's motivations and goals. As a chamber, we are committed to offering economic and commercial consultancy support to businesses seeking guidance in this regard.
Q: What initiatives have been undertaken to foster collaboration and connectivity between entrepreneurs from India and Mexico in the digital sector?
A: India has gained recognition as one of the world's Top 3 rapidly growing innovation economies, attributed to a transformed higher education system, a vast talent pool and the government's supportive stance toward fostering intelligent solutions. In 2016, the Startup India initiative was launched by the Indian government to further accelerate economic growth and create a robust ecosystem for nurturing innovation and startups. As a result, the number of recognized startups has significantly increased, from 726 in fiscal year 2016-2017 to 65,861 in fiscal year 2021-22. Likewise, Mexico has implemented the MIPyMES initiative, by which the state Ministries of Economy are directing their endeavors toward providing guidance and support for the development and expansion of small and medium-sized enterprises (SMEs).
During his visit to India in 2022, Minister of Foreign Affairs Marcelo Ebrard engaged with Indian IT companies and Incubation Master’s, an ally of the India-Mexico Business Chamber (IMBC). The purpose of these meetings was to devise a joint initiative and a series of knowledge-sharing, investment and acceleration programs tailored to emerging companies in Mexico. In continuation of these efforts, the IMBC is organizing a CEO meeting that will bring together prominent CEOs of Indian IT companies, such as TCS, Infosys and Wipro, key government officials from Mexico and representatives from the Mexican IT industry. This gathering will further foster collaboration and knowledge exchange between both countries.
Q: What investment prospects exist for Indian companies within Mexico’s electromobility sector, given the agreement between the Ministry of Foreign Relations and the Indian Council of Scientific & Industrial Research (CSIR)?
A: In 2018-2019, India experienced a significant rise in the import of lithium-ion batteries, amounting to US$1.23 billion. This figure was six times higher than the recorded figures in 2014-2015, establishing India as a major importer of this material. However, recent discoveries of substantial lithium deposits in the northern and northwestern regions of the country have led to a shift in focus toward research, specifically in the field of electric vehicles. The Indian government also launched the Transformative Mobility and Battery Storage Program, believing that India has the potential to become the largest market for electromobility within the next two decades.
On the other hand, Mexico possesses the 10th-largest lithium reserves in the world. However, the state of Mexico's electromobility sector may pose some challenges to Indian companies. But it is reasonable for India to consider manufacturing EVs in Mexico in the future.
Q: How can Mexico contribute to India’s energy transition?
A: Considering India's focus on cost-effective and risk-proof scaling up of clean energy, it is unclear whether Mexico can directly contribute to India's energy transition. Mexico has primarily contributed to India's energy security through petroleum, which is not aligned with India’s climate change policies. However, it is worth noting that developing countries, including India and Mexico, possess the potential for future growth and play a crucial role in driving the energy transition due to their abundant workforce.
Q: In the context of binational relations, how do you envision Mexico reaping benefits in the pharmaceutical sector?
A: India is the largest global supplier of generic medicines, accounting for a significant 20% share in global supply by volume. Additionally, it is a prominent global vaccine manufacturer. Mexico is home to over 10 Indian transitional pharmaceutical companies, including Dr. Reddy's and Zydus. Mexico can benefit from these established Indian entities by leveraging their expertise, substantial manufacturing capacity and competitive pricing. The bilateral collaboration between India and Mexico also encompasses several initiatives, such as digitizing health information and establishing a collaborative accelerator fund for biotech. Moreover, Mexico stands to gain valuable insights from Indian R&D centers, which can contribute to enhancing knowledge of innovative molecules and potentially update the list of products procured by the Mexican Ministry of Health.
Q: How can India facilitate the expansion of Mexican companies' business ventures in Southeast Asia?
A: Bilateral trade between India and Mexico has been growing at double-digit rates consistently, which is exemplified by the investments from leading Mexican firms, such as Nemak, Metalsa, Mexichem, Great Foods & Beverages, RuhrPumpen, Cinepolis and Kidzania. Notably, Mexican IT company Softtek has made history by becoming the first Latin American firm to establish a service provider presence in India. Additionally, Bimbo Group's acquisition of stakes in Harvest Gold and Ready Roti demonstrates the potential for expansion. Similarly, Cinepolis has successfully opened screens in India’s Tier 2 cities, further bolstering India's appeal as a partner for Mexican companies seeking new market opportunities in Southeast Asia. Furthermore, India's well-connected air routes and trade agreements in the region create favorable conditions for seamless travel and trade facilitation.
Q: What are the main challenges and opportunities of promoting binational relations?
A: Promoting binational relations presents a valuable opportunity for knowledge sharing. India's prominence in innovation and technology, coupled with Mexico's strengths in sectors like manufacturing, automotive and aerospace, creates a platform for exchanging expertise, research and best practices. These alliances further innovation, productivity and economic development. Additionally, both countries can engage in cultural exchanges, such as art exhibitions and film festivals to ensure a deeper understanding and appreciation of each other's heritage.
However, advocating for more responsive governments and presenting solutions to address challenges in the bilateral business ecosystem remain ongoing tasks. The IMBC is committed to tackling these issues, resulting in investment expansion and solidifying Mexico's position as a priority country in the Latin American region. Moreover, differences in legal systems between the countries, along with the dynamic nature of reforms and initiatives in Mexico, pose complexities in understanding and adhering to each other's laws and regulations.
Q: What are your expectations for India and Mexico relations in the short and long term?
A: Both countries share many opportunities and the chamber expects that our leaders will continue to engage in high-level talks to further enhance bilateral economic and commercial relations. We anticipate continued cooperation agreements between our governments, with a focus on research, innovation, science, aerospace and IT. As a chamber, our aim is to add value to the bilateral relationship and we are eager to collaborate in increasing Mexican exports to India, promoting bilateral investments, facilitating technology transfer and supporting the expansion of Indian companies established in Mexico.
IMBC The India-Mexico Business Chamber promotes binational relations between the two countries, especially in terms of business development.