Indian investors enter the Caribbean

As an emerging economic power, India finds that its companies expand into remote territories well in advance of its diplomats or other government agencies. Distant places like the Caribbean are fast becoming a major destination for business and major investments from India and the competition that pits India against its giant northern neighbour China, too, has spread to the islands. Despite China’s growing diplomatic clout, the private nature of India’s business expansion may give it an edge.

India’s links to the Caribbean date back to the late 19th century when Britain brought thousands of indigent servants from the subcontinent to work in its plantations. During the past five years, a new set of Indians have penetrated the Caribbean nations: In the oil-rich nation of Trinidad and Tobago, India has emerged as one of the major economic and political actors, and by the end of 2007, Indian companies had invested $3.4 billion in various projects across the entire spectrum of the economy.

Indian capital is present in every sector of the economy - mining, agriculture, banking and tourism. Reflecting a growing thirst for raw materials, the bulk of Indian investment went to the mining sector. The largest investors are Mittal Steel, so far investing $2 billion, and Essar Steel with $1.2 billion, for steel-processing plants. At least four Indian-owned hotels currently serve the islands. The government has also awarded infrastructure projects to Indian companies, not just in telecommunications and IT-related services, but road construction.

In 2006 the Tobagonian Minister of Trade and Industry Kenneth Valley visited New Delhi and Mumbai accompanied by a 20-member business delegation. In May 2006 a delegation of 120 Indian businessman representing 50 companies arrived on the island to participate in a 10-day India-Trinidad and Tobago trade fair, followed with a visit by Indian Vice President Bhairon Singh Shekhawat in November at the head of another Indian business delegation.

To win good will among the regional countries, India has followed China’s footsteps into the developing world, by building infrastructure projects and providing financial assistance. Indeed, the Chinese presence in the Caribbean, with the notable exception of Trinidad and Tobago, is far greater than India’s. In 2007 trade between China and the 11 Caribbean nations that recognise Beijing rather than Taiwan stood at $3.85 billion and has been growing at an average rate of 30 to 40 per cent a year for the past three years.

Nonetheless India is determined to increase its presence in the region. The Indian government has helped computerise the secretariat of the Caribbean Community (CARICOM), the regional organisation of 15 Caribbean nations, at a cost of $1.3 million; Indian companies have won major irrigation-infrastructure contracts in Jamaica, Guyana and Suriname; Indian companies have build cricket stadiums in Guyana and Barbados at the cost of $25 million and $30 million, respectively; other major projects include a new highway and bridges in Suriname and a possible multimillion dollar contract for telecommunications network infrastructure in Guyana.

Hungry for natural resources, India has shown considerable interest in forest, mining and agriculture sectors: Four Indian companies are already importing timber from Guyana and Suriname with such imports expected to increase in coming years. Since 2002 India has given Suriname $72 million in credit lines for various infrastructure and development projects. Other Indian assistance to Suriname includes a cashew-processing plant and significant donations of pharmaceuticals and medical equipment.

On the energy front, delegations from India’s state-owned oil giant Reliance have visited Guyana and Suriname in 2007 to negotiate oil and mining concessions. Indian companies are particularly interested in the potentially lucrative gold and diamond fields of Guyana and Suriname located deep in the Amazon forest. With the current oil crisis, both India and China pursue any source of oil, even the most difficult and expensive to extract.

Sugar exports, once a major source of revenue for Caribbean nations, have suffered significantly since the European Union imposed serious restrictions on imports. Indian sugar companies have jumped into this weakened sector, investing in revitalisation and injecting funds into the sugar industries of Jamaica, Guyana and Suriname.

In August 2004 India granted Guyana a $25.2 million credit line for the modernisation of its sugar industry. India has also sent agriculture specialists to assist the region’s country while also providing scholarships for Caribbean students to attend agriculture-related studies at Indian universities.

As a more affluent Indian population increases its consumption of sugar and sugar-related products, the country hopes to transform the region into one of its main suppliers. Indian support for the debilitated Caribbean sugar industries could deliver substantial benefits to both countries: for the Caribbean nations in particular, revitalisation of this sector would create jobs, alleviating serious unemployment faced by some of the countries.

Inspired by Brazil’s success with ethanol exports, Caribbean countries such as Suriname, Guyana and Jamaica have partnered with Indian companies to investigate ethanol production.