India-Brazil will Focus on Agreement on Cooperation and Facilitation of Investments (ACFI)

In January at the end of talks between the leaders of India and Brazil, `Action Plan’ and 12-14 other agreements are expected to be inked in new sectors as identified by both sides. President Jair Bolsonaro accompanied by a large official as well a business delegation will be the chief guest at the Republic Day parade in 2020.

Andre Aranha Correa da Lago, ambassador of Brazil to India has said, “We already have a strong relationship with India. However during the forthcoming visit of our leader President Bolsonaro, the focus will be on further expansion and deepening our relationship. In fact there is a possibility of a strategic partnership between the two countries as there seems to be little or no disagreement in their worldviews.”

Officials from both sides have been meeting stock of what is already in place and what more needs to be done to further strengthening the existing cooperation in various sectors. For the first time the two countries are working to sign the Agreement on Cooperation and Facilitation of Investments (ACFI) agreement which is very important and an agreement on Double Taxation Avoidance is expected too.

“We understand that India has given Brazil the biggest recognition by having our president as the chief guest at the Republic Day Celebrations. And this invitation is also a validation of the recognition India gives to the LatAm region. It is very clear that Brazil is a priority for India,” the envoy said.

Brazil has major advantages in several areas including energy (all forms of energy), agriculture, defence, science and technology and space. “However there seems to be a lack of a framework of cooperation with Brazil and which is why the Action Plan is in the process of being finalised ahead of the visit. It is clear that there are mechanisms in place to strengthen our relations, however efforts will be made to bridge the gap where they are missing,” he added.

Brazil is one of the important trade partners in the region, and an important investment destination for Indian companies. Focus of the talks between the two leaders in New Delhi will be Economic and Financial dialogue, Bio-Energy, Oil and Gas and Mineral Resources, and how Brazil can play a critical role in India’s Food Security. During Prime Minister Narendra Modi’s recent meeting with the Brazil leader on the sidelines of the BRICS summit, that country had offered its help in boosting the production of ethanol and to open up the Indian market for the bio fuel.

Defence Relations

“We are keen to develop military platforms in joint ventures with India and are open to the idea of making investments in India’s Make in India initiative. As you are aware Embraer is already present in your armed forces. We hope there are more sales in the future. We are encouraging our companies to participate in the DefExpo next year.”

Embraer has developed an advanced model for military transport which could be used by the Indian Air Force (IAF) and it is likely to be offered to India.

Brazil’s biggest aerospace company has been in the process of being bought over by the US based Boeing Company. In the future we are expecting the Indian domestic airlines to buy more Embraer-Boeing civil aircraft.

India-MERCOSUR Expansion Talks

Brazil played a very critical role in India-MERCOSUR Preferential Trade Agreement (PTA), which allowed India to get access to the large South American market. While India’s trade with Brazil in 2018-19 stood at more than $8 billion, between 2017-18, trade with MERCOSUR member countries was of over $10 billion. “Our President does not want MERCOSUR to hinder growth. He believes that Brazil should go beyond the list of items and make positive advances.”

Auto Show

We will be participating in the Auto show too next year and there will be a stand to showcase the use of Ethanol in a developing country. In fact during the visit both countries will be signing MoUs in the field of the use of Ethanol: Development of ethanol and bio-energy; and an agreement between two institutes for research in Ethanol. In Brazil, ethanol is the preferred fuel of the consumers.

Visa free travel for Indians

The idea is to promote Brazil as a destination for the Indian tourists as well as promoting people to people contact. It is also to encourage Indian businesses to travel easily to Brazil.

Indian and Brazilian Companies

According to the Brazilian envoy “Sterlite Power participated in the transmission auction held by the government. Brazilian company Marcopolo is already here in a joint venture with Tata Motors for making buses. Some of our companies which are having expertise in banking system and ATMs are already present in India.”

The Brazilian company WEG S.A. is producing electric generators and has started manufacturing wind turbines for the Indian market.”

What is ACFI?

This agreement is promoted by the government of Brazil as an alternative to the `traditional’ Bilateral Investment Treaties (BITs).

Brazil has already signed ACFIs with seven countries including Mozambique, Angola, Malawi, Mexico, Colombia, Chile and Peru. And has entered into a Protocol on Cooperation and Facilitation of Investments (PCFI) with its MERCOSUR member states.

The main difference between ACFI and BIT model is the absence of an Investor-State dispute resolution mechanism. It focuses on dispute prevention and bilateral governance, limiting arbitration to the State-to-State level.

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Source: Financial Express

Image Courtesy: Alan Santos/PR

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