• PAGE ONE
• INDEX
• HOME

Emerging market for Indian business -- Samba in Venezuela

R. Viswanathan

TO THE average Indian, Venezuela is the land of beauties. In the last 50 years, Venezuelan women have been winners or runners-up at least 40 times in the international beauty contests. And for historians, it is the country of Simon Bolivar, the liberator of Venezuela and Latin America. Bolivar was the first to try to unite Latin America, a dream being realised in parts today.

To the Indian Government and the public, in general, Venezuela is seen, at present, as partly responsible for the increase in oil prices. In the beginning, when the Venezuelan President, Mr Hugo Chavez, talked of reuniting OPEC, few took him seriously. E arlier, Venezuela was notorious for OPEC-quota-busting. But the Venezuela of today has changed fundamentally. It is committed to OPEC unity. The Venezuelan Oil Minister, Mr Ali Rodriguez, is OPEC's current president. Mr Chavez recently organised an OPEC Summit, 25 years after the first summit and only the second in the last forty years. It was held in Caracas in September and once again highlighted OPEC's critical role in determining international oil prices.

Politico-economic observers see Venezuela as an emerging leader in the region. Venezuela is part of the Andean community, an increasingly important regional market (including Colombia, Ecuador, Peru and Bolivia). Given its strategic proximity to the Cent ral American and Caribbean countries, and its link with the Southern regional market of Mercosur (Brazil, Argentina, Uruguay, Paraguay and Chile), the Venezuelan President has taken inspiration from Bolivar and made Latin American integration a priority.

The pursuit of regional unity and cooperation is part of the strategy to diversify political and economic relations and assert its independence in foreign policy. Last month, Venezuela signed agreements with 11 neighbouring countries, providing 130,000 b arrels a day of crude oil at discounted prices, with the payments spread over 15 years.

Venezuela is the world's third largest exporter of crude, with over three million barrels produced a day. It plans to increase production capacity to five million barrels a day in the next five years. It is the largest producer of oil in the western hemi sphere and has reserves of 76 billion barrels. The State oil company, Petroleos de Venezuela, SA, (PDVSA) is the third largest oil company in the world and the largest in the developing world.

Venezuela has huge reserves of bauxite, iron ore, coal and gold. The gold reserves of 10,000 tonnes represent more than 12 per cent of the world's total known reserves. Its gas reserves are also the largest in the western hemisphere. Venezuela has the be st hydro electric system in the region. The hydel power station Guri Dam has an annual capacity of 10,000 MW.

The political, economic and social environment of Venezuela is changing for the better. The economy has been opened up, and imports liberalised. Venezuelan industry is modernising and coping with the competition arising from globalisation.

The nation has a 24 million-strong population. GDP is $100 billion and foreign investment in the last three years was over $4 billion a year. This reflects the confidence of foreign investors in the nation's long-term potential.

India's exports to Venezuela, worth $30 million in 1999, were from the pharmaceutical, chemical, engineering product and textile sectors. Dr Reddy's Laboratories, Core Health Care, Aurbindo Pharma and other Indian firms have established operations in Ven ezuela. Ayurvedic medicines are also popular in Venezuela. Companies such as Himalayan Drug Company and Dabur have thriving businesses in the country. In addition, the Venezuelans have woken up to the possibility of sourcing software from India. In the f irst week of October, a 14-member Venezuelan software delegation visited India for the first time.

Some might say Venezuela is too distant, and bring up the language barrier as a drawback. Such barriers are even greater for China, Taiwan and Hong Kong, which do billions of dollars of business in Venezuela. If they can overcome these `barriers', Indian can certainly do too.

At the moment, the hydrocarbon sector is the focus of Indo-Venezuelan cooperation. ONGC is interested in participating in oil exploration and production ventures. Indian companies are targeting Venezuela for the export of equipment and human resources, b esides consultancy contracts in the oil sector. Oil India Limited is seeking Venezuelan technology for the production of heavy crude in Rajasthan.

Reliance Petroleum has been buying Venezuelan crude since April. Public sector oil buyers need to wake up. Buying oil from Venezuela is not only commercially-viable but a strategic imperative to diversify sources of supply. India needs to reduce dependen ce on a single region.

Besides oil, India can also import iron ore, steel products, aluminium, gold, precious stones and boiler fuel from Venezuela. The exports of $30 million can easily be raised to $150 million in the next three years. This is not wishful thinking. It is a m odest target that seeks a mere per cent of Venezuela's annual imports. This is based on the increasing prosperity of the market (even now the per capita income is nearly $5,000); the growing awareness and interest among Venezuelan businessmen about India 's export capabilities; and the Venezuelan Government's identification of India as a partner in economic, commercial and technological fields. Indian businessmen, who formerly neglected the Venezuelan market, have begun to realise its potential. The Comm erce Ministry, CII and Export Promotion Councils of India have begun encouraging and supporting Indian exporters in exploring this new market.

Venezuela is the gateway to the markets of the Andean Community, Caricom, and the Central American Common Market. Caracas forms the hub of the operations of many multinationals in this region. One reason is Caracas' climate, which averages 22-28 degrees centigrade, justifying the city's epithet of City of Eternal Spring. Situated in a valley 900 metres above sea level, and surrounded by beautiful mountains and greenery, Caracas has the appearance of a holiday resort.The Venezuelans have a high regard fo r Indian culture, philosophy, religions, Mahatma Gandhi and spirituality. There are over 50 Sai Baba centres in Venezuela, with many of the devotees chartering flights to India. The Venezuelan's admiration for India provides a solid foundation for the pr omotion of Indian business in this country.

(The author is the Indian ambassador to Venezuela.)