Latin American Investments in India: Successes and Failures


In 2020, foreign direct investment (FDI) inflows to India reached US$57 billion, a 13-percent rise from 2019.[1]  The allure of India’s massive consumer market and expanding middle class, which is estimated to reach 583 million people by 2025,[2] remains a key pull for investors. As corporate revenues and profits fell owing to the fallout of the COVID-19 pandemic, company valuations declined, providing a boon for those on the lookout for mergers and acquisitions (M&A). Foreign investors betting on India’s future set their sights on the country’s consumer brands, e-commerce and infrastructure companies, primarily through M&As. This was a quicker and arguably safer way to enter the market. As a result, cross-border M&As increased by 83 percent in India in 2020, rising to US$27 billion. The most notable was Facebook’s 10-percent acquisition in Jio Platforms, for a hefty US$5.7 billion.[3]

Latin American companies are among those that have made recent inroads to the Indian market. Following initial negotiations towards the end of 2020, the Mexican bread and bakery multinational, Bimbo Group, acquired India’s iconic Modern Foods, the first Public Sector Undertaking (PSU) privatised by the Government of India in 2000.[4] With little fanfare, by February 2021, Bimbo has effectively become the largest bread company in India, edging out its chief competitor, Britannia Industries. This is Bimbo’s second acquisition in India, following its buyout of Ready Roti Limited’s Harvest Gold brand in 2017.[5]

While Bimbo’s acquisition of Modern Foods may not make headlines, it deserves some attention. In its heyday, as the first branded bread company in India and one of the country’s illustrious PSUs, Modern Foods held 40 percent of the national bread market. This was before it was sold to Hindustan Unilever Ltd in 2000, and later to Everstone Capital in 2016.[6] Today, it is safe with Bimbo, the world’s largest bread company with annual sales of US$15 billion, 203 manufacturing plants, and nearly 3 million points-of-sale across 33 countries.[7]

However, not everyone can prosper during times of crises. Some investors are forced to cut their losses and exit investments. This was the case with Marcopolo, a bus manufacturing company from Brazil. Through its joint venture (JV) with Tata Motors in 2006, Marcopolo invested US$90 million, manufacturing some 30,000 buses annually from plants in Dharwad, Karnataka and Lucknow, Uttar Pradesh. Millions of Indians ride the Tata-Marcopolo buses, from passengers in public transportation buses in Delhi and Mumbai to children in private school buses equipped with GPS trackers and CCTV cameras. Still, in late 2020, Marcopolo announced its exit from India by selling its 49-percent stake for a meagre US$14 million to its JV partner, Tata Motors.[8]

Bimbo and Marcopolo are two examples of multinational companies from the Latin American region (or simply, Multilatinas[a]) who have a penchant for the Indian market. Their experiences are illustrative of the mixed success of Multilatinas in India: some have achieved considerable success over the medium or long term, while others have endeavoured but ultimately given up.

This paper studies 50 Latin American companies that have invested in India since the 1990s. The companies are classified by country of origin, sector, manufacturing capacity, and the scale of investment. So far, 15 companies have exited or sold their investments to Indian partners, while the remaining 35 continue to strive to succeed in what is arguably one of the world’s most competitive and challenging corporate environments.

Their collective experience holds lessons for foreign investors interested in the Indian market. This is especially true for those from developing countries that may find certain familiarities in India, be it the large rural consumer base, relatively lower levels of financial inclusion, competitive prices, complex tax systems, or an unrelenting bureaucracy. There are lessons here for the Government of India too, specifically on the motivations behind these foreign investments and the sectors that hold most potential for investment. Also, the potential Indian joint venture partners and Indian companies looking for foreign capital can learn about the nuances of foreign partners’ motivations and how to utilise their expertise to leverage local and regional markets.

The Story of ‘Multilatinas’ in India

The term ‘Multilatinas’ was first used in 1996 in a magazine, América Economía,[b] which in the same year began publishing lists of the top 100 Latin American companies in the region. These include the region’s top companies in varied areas—from energy and infrastructure, to agro-industry and telecommunications; they all enjoy varying degrees of success.

Thirty of the 50 Latin American companies in India are Multilatinas, while the remaining are mostly the region’s small and medium-sized enterprises (SMEs). Though the SMEs do not belong to the Multilatinas category, they still maintain a considerable international footprint. The Multilatinas make up the large majority (86 percent) of the total US$1.56 billion investment by Latin American companies in India (see Figure 1).

Figure 1: Multilatinas Investing in India

Source: Author’s own calculations, based on primary research

Many of these Multilatinas can compete globally, be it in India, China, Europe or the Americas.  For some, such as Peru’s Grupo AJE, which squares off against Coca-Cola and Pepsi, or Mexico’s Cemex, the third-largest cement producer in the world,[9] the Indian market forms only part of their global ambitions. This is also why some of the Multilatinas that fail in India can afford to leave, while relying on other markets in Asia to hedge their losses. For instance, the 10 Multilatinas that have so far closed or sold their India businesses, even after investing US$619 million in the country, have sizeable operations in China, Southeast Asia, and other emerging markets. On the contrary, smaller Latin American companies that invest in India tend to persevere despite losses, as they cannot afford to simply write-off their investments. Also, most of these SMEs have only a small presence in other Asian countries. As a result, the ratio of Multilatinas that continue to stay in India versus those that have exited is currently 2:1. The ratio of other Latin American investors (non-Multilatinas) is 3:1 (15 companies continue to stay in India, five companies have exited). 

Drivers of Latin American Investments in India

The story of Latin American investments in India runs parallel to that of the country’s economic growth. India’s gross domestic product (GDP) grew at an impressive average of 7.5 percent in the first decade of the 21st century.[c] Prior to the global financial crisis, India’s FDI inflows rose from a paltry US$3.5 billion in 2000 to US$43.4 billion in 2008.[10]

Some Latin American companies took notice of India’s growth story and decided to invest in the country. The first to do so were mining, automobile and service companies, all of which held dominant market positions in their home countries as well as in the larger Latin American region. Soon, companies vying for the Indian consumer market followed, in the food, entertainment and fashion segments. A host of companies specialising in engineering and machinery also joined India’s manufacturing value chains. Most investors from the Latin American region came from Brazil and Mexico, while a handful made their way from Argentina, Chile, Colombia, Guatemala and Peru. Their interest in India can be categorised broadly thus:

  1. Value Chains: The primary…

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