San Juan del Sur, Nicaragua (photo: Darren Lawrence / Pexels)

Indian tech investors have been showing an increasing interest in doing business in Latin America in recent years, attracted by the high margins on offer in the region’s growing and unsaturated markets. With the exponential economic growth India has witnessed since the turn of the century likely to continue once the ongoing horrors of the COVID-19 pandemic are over, an increasing number of Indian tech entrepreneurs can be expected to emerge who will be looking abroad for new opportunities, with Latin America and the Caribbean (LAC) prime destinations. Such a tendency should be welcomed and encouraged both in the subcontinent and in LAC, given the profits on offer to investors and the expertise that Indian tech entrepreneurs can bring to the table.

Below, the current state of Indian investment in the region is deliberated, before deeper consideration is given to opportunities for Indian tech entrepreneurs. But first, thought is given to India’s emergence as a potential source for major tech investment in LAC.

An Emerging Powerhouse

Boasting the fifth-largest economy in the world by gross domestic product (GDP), India is already a powerhouse in the global economy, with a great deal more growing to do. That status has come on the back of almost unfettered economic growth over recent decades, with the Indian economy growing more than tenfold between 1993 and 2019, based on GDP.

That growth has also resulted in a corresponding improvement in prosperity, as measured by gross national income (GNI), which almost quintupled between 2002 and 2019 to reach USD$2,120 per capita.

A photo of an office worker in Delhi, India, representing the significant development India's IT sector has seen
An office worker in Delhi (photo: Raj Rana / Unspalsh)

With the objective of building India into an upper-middle income country by 2030, recent years have seen the country make regulatory improvements and increasingly encourage the likes of social and financial inclusion, sustainability, human development, rural transformation, and infrastructure development. 

The country is also a major hub for innovation, famed for its massive and highly developed IT and software industries, with the IT sector alone almost tripling in economic value between 2008 and 2019, when it reached $191 billion.

That growth has generated a new community of investors and thought leaders in tech, as well as a growing level of interest in overseas expansion among Indian entrepreneurs.

Indian investment in Latin America

Economic ties between India and LAC have been growing over recent years, and the Inter-American Development Bank (IADB) has highlighted the “huge” medium-term potential for that relationship to deepen. Because while trade between India and LAC increased almost twenty-fold in the space of two decades to reach $39 billion in 2019, as the IADB has highlighted, that came despite sometimes high costs to trade. 

With a series of reforms slated to eliminate red tape, an analysis by the IADB has suggested that Indian exports to LAC could grow by as much as 46%, while LAC exports in the opposite direction could jump a similarly impressive 42%. That would mean over $16 billion in additional trade each year, based on the 2019 total.

While Latin America is home to a number of innovation hot spots, its startup ecosystem is significantly less developed than India’s. Given the size of India’s IT sector, and the ongoing growth of technology sectors in Latin America, this seems a natural area of opportunity for Indian entrepreneurs and startups to move into.

Furthermore, with an emerging trend in the USA and Canada towards “nearshoring” rather than “offshoring” — effectively meaning that work is outsourced to companies within the Americas, rather than the likes of Asia — a significant amount of work once directed to India can be expected to head to Latin America.

By investing in LAC, Indian entrepreneurs could continue to profit from US outsourcing, even as it moves away form their home country.

Opportunities for Indian tech investors in Latin America

Technology sectors have been growing at significant pace in many Latin American countries over recent years, and can be expected to play a role in economic recovery from the effects of the COVID-19 pandemic, as well as in promoting future economic development beyond the crisis.

The growth in technology and innovation has also seen a significant increase in interest among investors, with Japanese corporate titan SoftBank announcing in 2019 the establishment of a $5 billion technology growth fund focused on Latin America.

A photo of someone using a mobile-based payment system, highlighting the ease and inclusiveness of fintech solutions.
Fintech promotes inclusion (photo: Jonas Leupe / Unsplash)

Given the growth that has been seen and expertise that can be found in the Indian technology sector, tapping into LAC’s flourishing tech ecosystem presents a host of possibilities. Those opportunities are bolstered by the fact that many tech startups in LAC are focused on the English-speaking North American market, meaning that end products will be produced in one of the official languages of India.  

Meanwhile, with regard to tech startups focused on local populations, many of the problems they seek to solve — such as overcoming exclusion from the financial system via financial technology (fintech) — are problems also being confronted in India. 

That means Indian tech investors who do look to LAC will have a great deal of choice, as well as highly valuable experience to call on. Because where they are not able to take advantage of their shared language with North American markets, they will likely be offering novel solutions to social problems that transcend the two regions.

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