Brazil and India business environment comparison Essay

The United States and brazil nut entered into a common agreement targeting to improve democracy in the horse opera Hemisphere and to bring an accelerated growth in regional communication channel and development so that the politicss of the region can ensure its citizens better reaching for greater prosperity. (Common Goals and Ch entirelyenges in brazil nut-USs Agenda) The prospects for conducting business in brazil-nut tree atomic number 18 tremendous in view of its 150 million possible consumers, a colossally diversified economy and a gross domestic crossroad worth(predicate) of US$447 billion.However, till the nation attains improved food market and stinting reforms, majority of the opportunities for US companies ar prone to hover around finicky sectors and projects. (Jennings, 14) The closed markets and heavy government interventions marked the economic development of Brazil during the last thirty long time. During the 1960s and 1970s, such policies of import subst itution and huge levels of international debt generated accelerated growth and industrialization however, giving rise to abundant term problems like long term economic difficulties, inclusive of spirited inflation, international debt difficulties and non-competitive industries.During the year 1990 the Government of Brazil initiated queer market ease measures including reduction of condescension and investment barriers, declining import duties over 100% to a high of 35% inclusive of an average of 14%. market place liberalization also incorporated several tax and regulatory innovations that allow been of profit to the foreign investors. The reduction of taxes on profit remittances and simplification of procedures and withdrawal of slightly of the disincentives to reinvest the profits have provided increasing scope for business activities in Brazil.As a result, the trend of the reaction of US companies was seen to be remarkable. (Jennings, 14) US companies exported goods of worth $6 billion enabling Brazil to be among the top 20 export markets of the sphere. The United States tends to maintain the position of being the single estate supplier to Brazil constituting about one-third of the total of the Brazilian imports. The telecom and informatics market of Brazil extends fabulous prospective for US business, for the equipment manu detailurers as s hale(p) as for the service providers. The Telecommunication sector provides a market worth of $3 billion in Brazil.The US companies have even up off extended limited involvement in the telecommunication sector and ar exploiting the gets of extending reclusive networks as well as equipments. The energy sector in Brazil also heart good prospects for US technology as well as equipment. The current agreements and subsequent legislations at higher government levels and the private sectors assures for future prospects. The US equipment manucircumstanceurers be encouraged to actually restrain benefit of the opportunities that already prevail and are prone to expand with regard to the inside demand that promotes the expansion of this sector.(Jennings, 15) The Indian markets along with its over one billion population, provides profitable as well as diverse opportunities for US exporters with the right kind of products, services as well as commitment. Such opportunities are accelerated with the depreciation of sawhorse in the recent years in relation back to its competitive currencies. The infrastructure, high-tech, energy, health care, environmental, transportation as well as defense sector are prone to surpass the tens of billions of dollars mark in the mid-term as the Indian economy tend to globalize as well as emerge stronger.In the year 2005, the total bilateral trade was $26. 77 billion. The US exports to India in 2005 was enhanced to $7. 96 billion, which was a 30. 3 percent growth in comparison to the previous year. (India Market of the month) The strength of India for US companies is promising since India is the second largest small car market of the macrocosm India is one among the three countries that manufactures its own supercomputers India is the one among the six nations that is able to tack its own satellites and India is having the second biggest group of software developers immediately after the US.The Indo-US relation is presently growing through a remarkable transition. The two nations which were having a gap between them in political and economic terms during the latter(prenominal) part of the 20th century, presently consider their national goals converging on several areas. (India Market of the month) Indian tariffs have been decreased considerably since the earlyish part of the 1990s. Irrespective of the fact that the tariff and poor infrastructure entails remarkable challenges for foreign investment and development, the infrastructure needs in India also entail trade and investment facilities for US companies.The best prospect s for US firms and US exports on the basis of estimated Indian imports from the US has been earmarked to be Airport & Ground Handling, computing device and Peripherals, Education Services, Electrical Power Generation, Transmission & Distribution Equipment, Food bear upon & Cold Storage Equipment, Oil & Gas Field Machinery, Pollution see to it Equipment, Safety and security equipment, Telecommunication equipment, Textile Machinery, water etc. (India Market of the month)Condoleezza Rice, repository of State for United States and Celso Amorim, Brazilian Foreign Minister in their run across on 26th April, 2005 in Brazil had a discussion in relation to the common agenda of the two nations as well as that of the unique challenges which were confronting the entire hemisphere. (Common Goals and Challenges in Brazil-USs Agenda) Brazil as well as Argentina poses certain particular business challenges to be confronted by the US firms.For example, legal provisions with regard to importing technology materials submit payment of duties, tariffs and a value added tax VAT which is as more as 22 percent of the total cost in Brazil. The business is even more complex in Brazil due to the variation of importation laws from one province to an opposite. The fluctuating currency exchange range as well as local economic issues pose wicked challenges for conducting business. ( fear Spotlight cursor South America) Franklin L.Lavin, chthonic secretarial assistant of Commerce for worldwide Trade, American Chamber of Commerce, New Delhi on May 1st, 2006 remarked that the Indo-US relationship have improved on many fields and have great prospects in the sphere of trade. However, US face remarkable challenges as well. Irrespective of the fact that India has exhibited good trade statistics and the progress in the sphere of economic reforms and are opening markets during the last one and half decade there hitherto need to be improvement in several spheres in gear up to reflect Indias important part in the world economy.The economic philosophies of Fabian socialism as well as third world nationalism are holding India hostage for many years. As a result of this it has been pointed out that even with 30 percent growth in US exports to India during the last year, India could constitute only 1 percent of all exports of US. The economic reforms in India is in relation to world reforms as a result of this the momentum of India is not impressive in the context of the disceptation for global attention. (Remarks by Franklin L. Lavin Under Secretary of Commerce for International Trade, American Chamber of Commerce, New Delhi)The annual US exports of $8 billion dollar is what the US ships to Canada within two weeks. In terms of the US foreign direct investment in India the cumulative figure is only $6. 2 billion at the end of 2004, US being the largest investor while the US FDI in Singapore remains amounts to be $56. 9 billion. Irrespective of the fact that tariff f or non-agricultural products have significantly reduced, it take over remains at 40% in case of agricultural products. The vibrant IPR regime is considered critical to the enhancement of a creative, technologically advanced economy.Irrespective of the fact that India has opened up a silver of its retail sector to foreign investment, presently, the sector is still considered to be closed to most of the American retailers. US companies required to annul the aggressive competition exerted by the companies from Europe, Canada, Korea and Japan by knowing how to correct their products as well as facilitate their activities in order to take advantage of the huge potential in India. (Remarks by Franklin L. Lavin Under Secretary of Commerce for International Trade, American Chamber of Commerce, New Delhi)The trading companies are generally prone to four types of risk such as strategical risk, operational risks, internal financial risks and compliance risks. (Sadgrove, 83) The trading ri sks in Brazil are considered substantially greater in comparison to the developed nations. The political risks like dismissal or appointment of a key government minister can exert influence on the value of the apportion of the company to have fluctuations. The purchase of shares of Brazilian companies is subject to increasing risks of fluctuations in the exchange rate that may exert considerable losses.Exchange rates also have a tremendous impact on the profitability. inflationary trends also influence much on the profitability by fashioning the services of the company more expensive. (Sands, 27) For US Government, for over several years Brazil has been a bastion of anti communism while the other states of South America seem to be leaning towards communistic. Moreover, the US companies in Brazil never desire to take the risk by means of their operations being disrupted by that of the shipping turmoil.(Fitzgerald, 20) The US companies set-aside(p) in outsourcing of their software development to India are prone to be accidental injury by the industrial espionage and poor intellectual property safeguards. However, India is seen to have a far outstanding cultural and legal climate for IP auspices than many other nations offering offshore coding. (Pedraja Toman, 164) References Business Spotlight Arrow South America. Retrieved from http//www. arrow. com/media_center/news/BusinessSpotlightArrowSouthAmerica. htm Accessed 11 December, 2006Common Goals and Challenges in Brazil-USs Agenda. 27 April, 2005. Retrieved from http//www. brazzilmag. com/content/view/2207/ Accessed 10 December, 2006 Fitzgerald, Michael. Intellectual property protection. CIO Magazine. 15 November, 2003. pp 18-21 India Market of the month. US Commercial Service India. Retrieved from http//www. buyusa. gov/india/en/motm. html? print=1 Accessed 10 December, 2006 Jennings, Horace. Brazil slowly emerging giant offers enormous potential. Business America. March, 1994. Vol 115 No 3 pp 14-16.Pedra ja, Rene de La Toman, Rene De La Pedraja. Latin American Merchant Shipping in the Age of Global Competition. Greenwood Press. 1999. Remarks by Franklin L. Lavin Under Secretary of Commerce for International Trade, American Chamber of Commerce, New Delhi. 1 May, 2006. Retrieved from http//www. ita. doc. gov/press/speeches/lavin_050106. asp Accessed 11 December, 2006 Sadgrove, Kit. The Complete Guide to Business insecurity Management. Gower Publishing, Ltd. 2005. Sands, Gary. The Risks and Rewards of Investing in Brazil. Brazzil Magazine. 23 March, 2005. pp 27-30