Paraguay is characterised by its market economy, which depends largely on the informal sector. Agriculture and agri-related activities are the key forces driving the economy forward. However, with changing times the focus on agriculture has shifted to manufacturing activities. Realising the critical role that foreign investments can play in developing the country’s infrastructure, the Paraguayan government is calling upon investors from countries such as India and China.
Investing in Paraguay
Over the years, Indian exports to Paraguay have increased manifold largely due to the increasing demand for Indian products in Paraguay. This has also led to substantial increase in the volume of total trade between the two countries. Notably, in 2007-08, total trade between India and Paraguay stood at around US$46.99 million, marking a 56% increase as compared to the year-ago period.
Indian SMEs that have ventured into the Paraguayan market have benefited from its investment-friendly policies and business conducive environment. Paraguay exempts all foreign companies from paying Value Added Tax (VAT) and excise duties for the first 5 years. In addition, the Paraguayan government provides several concessions to foreign companies investing there.
F&B cos tapping Paraguay’s potential
Paraguay has turned into a highly profitable market particularly for Indian SMEs in the food processing segment. Paraguay is also stepping up efforts to emerge as a chief soybean exporting country to India. Indian agri firms are eyeing Paraguay for buying and leasing cultivable land available at highly reasonable prices.
Other sectors that have been identified as potential segments of growth include textile, leather, gems and
Jewellery and pharmaceuticals. Indian SMEs can explore these segments by acquiring raw materials from Paraguay at cheap prices and exporting finished goods to Paraguayan companies and exporters.
PTA to boost trade relations
In the past few months, governments of both countries have undertaken some important measures to strengthen bilateral trade ties between the two nations. A significant step in this direction has been the signing of the Preferential Trade Agreement (PTA), which includes provisions for enhancing mutual cooperation between SMEs in India and Paraguay.
Concerted efforts like these will ensure long-term growth for Indian SMEs eyeing expansion in Paraguay.
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David Parks is a well known author and has written articles on
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