India vs Mexico: competition for investment

India and Mexico are two of the most important emerging economies in the international landscape, each one in its own region. Historically, both countries have had commercial relations sustained by mutual understanding and cooperation.

The commerce between the two nations took a big step forward in 2018, when it passed for the first time $10,000 million dollars in mutual exchange: $4,923 million dollars in Mexico exportations and $5,231 million dollars in articles imported from India.

The Asian country rose to the 9th position as a commercial ally for Mexico, that is the 2nd main American, just beside the United States.

But there’s a dilemma for the investment sector to make the most intelligent decision in terms of making a business grow: taking it to the nearest country or going overseas. A nearshore vs. offshore decision.

We compare Mexico’s nearshoring and India’s offshoring, considering the economic perspectives, infrastructure competitiveness, available talent and workforce, communications, and areas with growth potential.

Economy size

India is the 5th largest economy in the world. In 2019 it had a gross domestic product of US $2.94 billion dollars, higher than the United Kingdom or France.

In terms of per capita purchasing power parity, the Asian country is 3rd globally, although it is the 2nd country with the most population in the world (1,339 million people).

Among the strengths of this economy, there are:

• It has the fastest-growing services sector in the world, which contributes to 60% of the economy and 28% of the employment. Industry (23%) and agriculture (17%) follow it.
• Limited dependence on exportations.
• High national savings rates.
• Favorable demographics.
• Rising middle class.

Mexico’s economy occupies the 15th global position, with a gross domestic product of US $1.27 billion dollars. Some of the most outstanding features of this economy are:

• Services sector is the most important for the national economy of the country, representing nearly 63%, followed by industry (33%) and agriculture (4% and in stand by for almost 20 years).
• Main commercial ally for the United States of America.
• 11th petroleum producer in the world.
• 11th place in the world’s population ranking (129.2 million people), with almost 60% of economically active population.
• Mexico has a network of 12 free trade agreements which allows the country to access 46 different markets around the world.

Status of investment and exchange

The main growing areas for investment in India and Mexico are information technologies (IT), the pharmaceutical industry and the automotive industry, areas where India is highly competitive.

The total investment is calculated at more than US $3,000 million, with more than 180 Indian enterprises that have activities in their own country, including joint ventures of TI/software, and pharmaceuticals.

Exportations from India to Mexico are mainly of vehicles and automobile parts, organic chemical products, aluminum products, electrical machinery and electronic devices, iron and steel products, gems, ceramics, and jewelry. 

 On the other hand, Mexican investments in India are near US $1,000 million dollars, mainly on home investments, multi-cinemas, infrastructure, automobile parts, food processing, and cement. 

India’s imports are mainly petroleum, electric products and machinery, electronic devices, automobiles, and vehicle parts.

Nearshoring in Mexico vs. Offshoring in India: pros and cons

Indian enterprises consider Mexico as an important place for investments, due to its proximity to the Latin American market, and to the North American market, with the free trade agreement between the United States of America, Canada, and Mexico. 

In the next chart we can look at the features each country has as a potential place for investors:

Both countries match in the main potential areas for economic exchange, there are: software, IT, pharmaceutical products, engineering products, renewable energies, biotechnology, vehicle parts, and minerals.

Is your company looking for the most favorable investment conditions, qualified workforce access, and high-quality providers? We have experts that can help you with your strategy for entering the Mexican industrial market.

For running your project, ask us in Frontier Industrial and get a place in the nearshore vs. offshore global dynamic.