NEW DELHI, May 25: In an effort to tap the enormous export potential to Latin American countries (LAC), the centre plans to launch a ``focus LAC project'' to increase the export earning capacity to $one billion in a year.The government plans to realise this objective by increasing shipments of engineering goods, textiles, chemical and agricultural products specifically to Latin American countries, according to a commerce ministry strategy.

A survey undertaken by the ministry has revealed that these countries comprise the second fastest-growing region in the world, accounting for five per cent of global trade.

Latin American countries, which are rich in natural resources, have been totally unexploited so far and the recent liberalisation process has resulted in integration of the Latin American economies with the global economy.

The reduction in tariff and non-tariff barriers, privatisation and liberalisation of financial and capital markets in those countries, besides control and inflation and tiding over of debt crisis are the positive trends for the focus, the ministry has concluded.

Latin American countries are rich in cash crops like coffee, sugarcane, tobacco, cocoa, soyabean, grapes, maize, wheat, bananas and corn and they have also been strengthened by arrangements of collective strength like Mercosul and EAN pact and Association of Carribean states.

The ministry's study found that there was an increasing inflow to Latin America to the level of $five million, while there was a demand to the tune of $1.2 billion for computer and related industries.

With global imports to the tune of $250 billion and a population of 450 million, there is scope for improving exports from India, especially when the country's share in the global trade there is only 0.6 per cent.

Figures available with the ministry reveal that during 1995-96 there had been a 28.07 per cent decline in India's share of exports and it had dipped by further 12.71 per cent in the first nine months of 1996-97.

The figures reveal that exports of chemicals had increased by 20 per cent during 1995-96 with Brazil, Argentina, Mexico and Chile being the main markets, while that of engineering goods declined by 23 per cent during the period due to lack of publicity and protectionist barriers, especially in Argentina for light commercial vehicles.

Textiles, particularly cotton goods, too, witnessed a decline of 10 per cent in 1995-96 in exports despite excellent potential and shipments of agricultural products, including processed foods, increased phenomenally during the period.

However, the ministry felt that the exports of agricultural products like rice, wheat, vegetable oils, processed good and dairy products were significantly low at $20 million compared to the potential.

Dwelling on low-key trade relations between India and Latin America, ministry sources said one of the reasons for them was that Indian exporters considered the region to be `too far' and `too insignificant'.

Other reasons are lack of special incentive for exports to these countries, no serious market development or promotional efforts to boost trade, absence of perception analysis of Indian products, routing of trade through the US and established channels rather than direct shipments and high volatility of currencies in these countries.

The ministry had also found shipments a problem though a direct link is now available between Mumbai and Santos in Sao Paulo, Brazil, while there is also inadequate network of Indian banks there.

The need for direct flights to Latin American countries and a commercial representative in the region was also felt. The issues are being addressed seriously by the respective ministries, the sources said.

The ministry initially plans to take up four commodity sectors for thrust and it would identity 20 top companies with the help of Federation of Indian Chambers of Commerce and Industry (Ficci) and Federation of Indian Export Organisations (Fieo) for this purpose.

It also plans to nominate a nodal office for each export promotion council to be closely linked with a project officer and organise ``India-South America partnership conference'' later this year to facilitate the visit of key businessmen and opinion makers.

The ministry plans trade facilitation through credit and risk cover while chalking out an action plan for textiles, engineering goods, chemicals and agricultural products.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.