Mumbai, India (PressExposure) April 08, 2009 -- Foreign trade is one of the chief aspects of Chileâs market-oriented economy. Over a period of time, this Latin American country has adopted and implemented various economic policies to facilitate its overall economic development. Consequently, the country has recorded a steady gross domestic product (GDP) growth of 4% in 2008.
In recent years, Chile has positioned itself as an attractive destination for foreign direct investment (FDI) in its major industries including copper, fish processing, cement, wood & wood products, iron & steel, transport equipment and textiles.
Scope of growth for Indian SMEs
Over the years, India and Chile have maintained cordial trade ties. India is a major exporter of commercial vehicles, leather products, pharmaceuticals, textiles and carpets to Chile. On the other hand, Chile exports copper, fishmeal, newsprint and almonds to India.
Indiaâs overall trade with Chile has witnessed a significant growth in the last decade. According to statistics, Indiaâs overall trade with Chile increased from US$586.65 million in 2005-06 to a whopping US$2093.35 million in 2007-08.[ii] The marked increase reflects the positive outcome of the concerted efforts taken from both sides to boost trade ties.
Industry experts opine that despite the various measures taken to strengthen Indo-Chilean trade ties, Chile is still a largely untapped market for the Indian SMEs. According to a study conducted by the Confederation of Indian Industry (CII), bilateral trade between India and Chile can reach US$5 billion by 2014 and the SMEs will play a pivotal role in achieving this mammoth target.
Analysts believe that Chileâs business environment and sound macroeconomic fundamentals offer immense scope of growth for the Indian SMEs, particularly in the field of information technology (IT), healthcare, education and human resource development (HRD). Other potential areas of establishing trade linkages include textiles, leather, manufacturing and mining.
Efforts to boost trade ties
Although Indo-Chilean trade relations have ample opportunities of growth, there are several factors that need to be addressed. Factors such as aviation links, direct shipping and non-tariff barriers prevent Indian SMEs from entering the Chilean market.
To address these issues in an effective manner, the governments of both countries should formulate a protocol on trade and business facilitation. Such a protocol should comprise treaties on rule of origin measures, valuation, standards, etc.
Realising the issues voiced by the entrepreneurs of both countries, India and Chile have decided to address the chief areas of concern. In a move to expand and strengthen bilateral trade ties, both the nations are assessing the possibility of signing a free trade agreement (FTA).
Furthermore, both countries are exploring areas of defence cooperation and scientific collaboration to facilitate technical exchange. These concerted efforts have been welcomed by SMEs from both countries, which feel that by focusing on these key areas, India and Chile can forge future alliances to benefit this segment of the industry.
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