Last year’s plunge in global oil prices has affected no other economy more than that of Venezuela, the banana republic of Latin America which is excessively dependent on oil exports. Crude petroleum accounted for 73% of the nation’s exports in 2015. Woes of dropping oil prices coupled with sky-rocketing inflation left the nation defaulting on its import bills. Apart from a few blips last year due to Venezuela’s lag in payments to Indian pharma companies, the country’s relations with India have been smooth.
India’s crude oil imports from Venezuela dominate bilateral trade between the two nations. Venezuela, one of the world’s largest reserves of petroleum oils, is the sixth largest exporter of the commodity to India. In the first 8 months of FY 2016-17, Venezuela accounted for 7.7% of India’s total crude oil imports.
In 2013, India-Venezuela trade was at an all-time high. But in the subsequent years, the total trade between the two nations has been successively reducing, culminating into a 51% decline in 2015-16. Rahul Shrivastava, India’s Ambassador to Venezuela, in an interview with The Dollar Business, sheds light on the challenges and opportunities in bilateral trade between the two countries.
Regarding the receding total trade, he said, “India imported about USD 13 billion of crude oil from Venezuela in 2013. The fall in oil prices meant that this figure came down to about USD 6 billion last year although the volume of crude oil remained the same.”
“Venezuela is going through difficult economic conditions, primarily because of the fall in oil prices. This has led to a hard currency crunch in the country, impacting imports from other countries, including India, especially the pharmaceutical sector for India,” he added, explaining why the value of Indian exports to Venezuela had almost halved in the past year.
India is Venezuela’s third largest export destination after USA and China. But Venezuela doesn’t fair well among the countries importing from India, making the trade balance tilt in favour of Venezuela. When asked about this lopsided trade equation, the diplomat said, “India’s non-oil exports to Venezuela in 2014 were about USD 250 million whereas non-oil imports by India from Venezuela were…