India-Brazil Trade: Opportunities and Challenges

Trade between Brazil and the India is growing rapidly

Considering that India has a population of around 1.41 billion people and Brazil has a population of 216 million, it is easy to understand the huge potential trade opportunity between the two countries.

BRAZIL-INDIA TRADE

In 2021, Brazil exported $4.9B to India. The main products that Brazil exported to India are Crude Petroleum ($2.23B), Soybean Oil ($776M), and Gold ($631M). During the last 26 years the exports of Brazil to India have increased at an annualized rate of 10.5%, from $362M in 1995 to $4.9B in 2021.

INDIA-BRAZIL TRADE

In 2021, India exported $6.77B to Brazil. The main products that India exported to Brazil were Refined Petroleum ($1.23B), Pesticides ($874M), and Packaged Medicaments ($349M). During the last 26 years the exports of India to Brazil have increased at an annualized rate of 16%, from $142M in 1995 to $6.77B in 2021.

Key potential sectors to enhance trade between India and Brazil are Motor vehicles, pharma sector, packaging (for pharma or food processing industry), plastics, chemicals and ceramics.

 

Investments and Joint Ventures

Through India, Brazilian companies can reach the Gulf nations and the Southeast Asian countries.

Indian companies can also leverage Brazil to export to the other South American countries. In fact Brazil is part of the Mercosur trade agreement. The Mercosur is one of the world’s leading economic blocs, and is made up of four member countries: Argentina, Brazil, Paraguay, and Uruguay. Major Indian companies such as Glenmark, ZydusCadila, Sun Pharma, Dr. Reddy’s Laboratories, Pidilite Industries Limited, ONGC Videsh Limited (OVL), NMDC Limited, TVS, Tata Motors, Infosys and Wipro, have already established branches in Brazil.

Brazilian and Indian companies are very interested in partnering especially for manufacturing and technology transfer. There is a high potential for joint ventures in the Agro-business and Tech industries.

Agro-Business

India recently approved laws that encourage the greater use of biofuel, mainly the use of ethanol, including through a strategic partnership with Brazil – a reference country in the production of ethanol, just as India is one of the largest producers of sugar in the world. India has already consolidated sugarcane plantations, which facilitates the process of also having a good production of ethanol, in addition to the transfer of technology from Brazilian companies to Indian companies, which enables greater capacity to production of ethanol on Indian soil, and even an increase in the percentage of ethanol that can be mixed with gasoline and used as fuel.

Renewable energy

Beyond ethanol, opportunities in renewable energy abound. The Brazilian and Indian governments have set laudable targets for expanding the use of solar energy. Both can benefit from parallel investments in this sector. In electric vehicles, for example, Tata Marcopolo represents a promising partnership. The Brazilian bus manufacturer, Marcopolo, formed a joint venture with the Indian Tata Motors, to offer buses and vehicles to the Indian market.

Technology

India is a reference in information technology and innovation in the world. The Indian Silicon Valley is mainly the cities of Bangalore, Hyderabad and Pune, which are world references and headquarters of the main technology companies in the world. Both Indian and international companies have innovation centers, laboratories, study and development centers in these cities. In this way, India has always generated a favorable ecosystem for innovation and for the creation of new solutions for the problems that the country and the world are facing.

In this way, India is one of the largest creators of startups in the world, and even with several of these startups becoming unicorns in record time, in the most diverse areas of activity and in the most diverse sectors. In the first four months of 2021 alone, the country got nine new unicorns, and by June, 16 went through this process, making the number of startups in India reach the mark of 50 unicorns in the country. Fintechs, startups that work to optimize the traditional process of financial services, represent the largest segmentation of Indian unicorns, and until April of the same year, more than 19% of Indian unicorns corresponded to fintechs.

This is largely due to a very favorable trajectory for the promotion of companies in the technology area, since India has always been concerned with ensuring that these companies have the conditions, scenario and ecosystem for their growth, including the implementation of policies public policies, such as payroll exemptions for employees of technology companies, reduction in the collection of taxes for these companies, incentives for the export of services, among several other policies that have been implemented in recent years. The result is that large Indian companies have become a reference in the world, such as TCS, Infosys, HCL, Wipro, KPIT, among many others that today are a reference in the development of new technologies, and in the management of existing technologies.

 

Comparison Between Brazil and India: Differences and similarities

Business, Social and political Environment

Brazil and India are different countries in terms of culture, but similar in socioeconomic matters, mainly in the matter of the two being in full economic development and being part of the BRICS, which is a group of emerging countries (Brazil, India, China, Russia and South Africa), that has been presenting an expressive development and which in the future may become major global economies.

Brazil and India are two large economies and are not investor friendly initially. That is why it takes some time for foreign companies to get used to the way of doing business in India as well as in Brazil and to understand for example the local tax system and bureaucracy.

Indian and Brazilian societies also share similarities that, in large part, have to do with their colonial pasts. They are marked by internal cultural differences and, above all, enormous social inequalities.

Both countries have vigorous democracies, where political parties form, unite, and divide in an unceasing kaleidoscope. They bring a protectionism that inhibits international competition and have state-owned industries that dominate key sectors. They are rich in human resources and have their economies driven by the expansion of the middle class, which calls for better public services, including education, basic sanitation and health.

Business Culture

Even though geographic distance, language and culture differences are probably the biggest challenges to increase trade between Brazil and India, there are many similarities and also some differences in the way Brazilian and Indians do business.

India and Brazil are High-context societies

Both India and Brazil are “high-context” societies, a term popularized by the anthropologist Edward Hall. It describes cultures and communication in which the context of the message is of great importance to structuring actions. High-context defines cultures that are usually relational and collectivist, and which most highlight interpersonal relationships. Hall identifies high-context cultures as those in which harmony and the well-being of the group is preferred over individual achievement.

In is true that both Indians and Brazilian are very family-oriented and value a lot relationship. They are also a bit too casual about meeting times and deadlines.

Both India and Brazil are High Power Distance Societies, but with some differences.

According to the famous anthropologist Hofstede, Both India and Brazil are High Power Distance Societies. But India is an even higher Power Distance society than Brazil (India score 77 vs 69 for Brazil). This indicates that both India and Brazil have a high level of inequality of power and wealth within the society. In high Power Distance cultures, the inequality of power, wealth, physical strength, and intellectual capacity is accepted by the population as a cultural norm.

In general , in India, employees are even more dependent on the boss or the power holder for direction. Indians tend to accept more un-equal rights between the power-privileged and those who are lesser down in the company hierarchy. Immediate superiors are accessible but one layer above less so. In India Leaders are even more paternalistic than in Brazil: Management directs, gives reason and meaning to ones work life and rewards in exchange for loyalty from employees.

In India, real Power is centralized even though it may not appear to be and managers count on the obedience of their team members. Employees expect to be directed clearly as to their functions and what is expected of them. Control is familiar, even a psychological security, and attitude towards managers are formal even if one is on first name basis. Communication is top down and directive in its style and often feedback which is negative is never offered up the ladder. In Brazil, the leadership style is in general more participative than in India.

In India business circles, status is recognized by age, university degree and profession, person’s job title, and material possessions. Therefore, people in power should be formally referred to as Sir, Madam, Mr., Mrs., or Dr. during communication in meetings. In Brazil, business communication is more informal than in India.

Business relationship similarities between Indians and Brazilians:

• Prefer to do business with those they know and relationships are built upon mutual trust and respect.
• Meetings are arranged in advance but their schedule is flexible. Meetings start with getting to know each other.
• Business negotiations are non-confrontational
• Successful negotiations are often celebrated by a meal

Body Language differences between Indians and Brazilians:

• Indians value personal space, Brazilians love to kiss and hug
• Indians avoid direct eye contact, Brazilians expect you to look in their eyes
• Using right hand is good sign in India, you can use both hands in Brazil
• Public displays affection are not proper in India, and normal in Brazil

 

Brazil and India Business Culture Training

A Brazil or India cultural awareness training can have a massively positive impact on your business performance if done well. The skill of delivering a good programme is in being able to relate the generic Brazil and India cultural points to the strategic and tactical objectives of the business.

If you are looking to improve your cultural understanding of Brazil or India and improve your effectiveness as a result, please contact us for an initial discussion