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Guyana- Economy

Guyana is an upper middle-income country and the third smallest country in South America after Suriname and Uruguay, with a population of 746,955 (2012 census). Guyana is well endowed with natural resources, fertile agricultural land, bauxite, gold, oil & gas and extensive tropical forests which cover more than 80 percent of the country.  Guyana has one of the lowest deforestation rates in the world and 90 percent of Guyana’s forest remains intact. Most of the country’s indigenous population lives in forests on which they depend for their livelihood. About 90 percent of the population lives on the narrow coastal plain. 

Traditionally, the Guyanese economy is largely based on the agriculture and extractive industries and is heavily dependent upon the export of few commodities - gold, bauxite, rice, shrimp & fish, timber and sugar and from which Guyana earns most of its foreign exchange through these exports. The Guyanese economy exhibited moderate economic growth in recent years, averaging 4% for the last five years. Due to higher output of rice, gold, other crops as well as enhanced construction and services activities, the economy rebounded with a 4.7% real GDP growth in 2019 from a disappointing 2.1% growth in 2017. Guyana closed or consolidated several sugar estates in 2017, reducing production of sugar to 92,232 tons in 2019, from the 137,307 tons in 2017. Much of Guyana's growth in recent years has come from a surge in gold production. With 641,828 ounces of gold produced and 682,081 tonnes rice in 2019, gold and rice production in Guyana have offset the economic effects of declining sugar production. The Guyanese economy recorded real GDP growth of 4.7% in 2019 due to higher output of rice, gold, other crops as well as enhanced construction and services activities. The agriculture sector experienced lower output of sugar, fishing, livestock and forestry which outweighed the higher production of rice and other crops. However, discovery of oil has opened up new horizons for Guyana and promises to transform this picture and make Guyana a lucrative new frontier of crude oil production. The discovery of oil off Guyana’s coast holds the promise of increased revenue to finance the country’s development needs, but brings with it new challenges that will require careful management of economic, governance, and environmental risks. Robust performance is expected in 2020.

With the massive oil and gas discovery in Guyana amounting to around 8 billion barrels, its economy is growing fast and according to World Bank reports, the GDP of Guyana is expected to grow 23% in 2020-21.  The International Monetary Fund (IMF) has projected that Guyana is expected to see GDP growth of 52.8% in 2020 due to anticipated oil revenues. The World Bank has also projected that Guyana is expected to see GDP growth of 51.7% in 2020 on account of oil revenues.

Guyana emerged as global oil producing nation on 20 December 2019 and its first consignment of oil has been shipped in January 2020.  Since the discovery of oil by US oil giant Exxon Mobil in 2015, a total of 19 oil discoveries offshore Guyana were made thus far. Exxon Mobil made 16 discoveries offshore Guyana in the Stabroek Block to date. The Stabroek Block to more than 8 billion oil-equivalent barrels. The Stabroek block is 6.66 million acres or 26,800 square kms. The area is being explored by a consortium led by ExxonMobil with a 45% stake, Hess Guyana 30%; and 25% held by a subsidiary of China National Offshore Oil Corporation (CNNOC). ExxonMobil is also the operator of the Canje and Kaieteur Blocks offshore Guyana.  A number of multinational companies such as Exxonmobil, Tullow Oil, Hess Corporation etc. who are into the oil exploration business, and support service providers have already established their offices in Georgetown. As India is showing interest in the Guyanese oil sector for business and investment, it is expected that Indian oil companies will also establish their offices in Georgetown in the near future which may result in increased bilateral trade.  Exxonmobil is looking to produce more than 750,000 barrels of oil per day by 2025 as it continues operations with numerous ongoing exploration and development operations offshore. Guyana could be among the world's largest per-capita oil producers by 2025.

Sugar production contracted by 11.9% due largely to the downsizing of the Guyana Sugar Corporation (GuySuCo’s) and industrial unrest which led to 151,000 tonnes cane unharvested in the latter part of 2019. The EU under the ACP/EU Sugar Protocol accounted for 55.5% of sugar exports, while the CARICOM region accounted for 18.6%. Average export price for sugar increased by 2.1% or US$7.42 to US$355.80 per metric tonne, compared with US$348.38 per metric tonne in 2018. Export earnings totalled US$27.8 million, 2.5% increase over 2018 figure.

Rice industry experienced yet another stellar year in 2019 with an increase of 8.8 percent higher than last year due improved agronomic practices, better varieties, greater yields per hectare and increased exports to Latin America, particularly Venezuela. Other major counties included Cuba, Columbia, Honduras and Panama. Export earnings from rice amounted to US$222.7 million, 19.7 percent above the 2018 level, due to higher export volume and higher average export price. The EU imported 34.1 percent of rice, CARICOM’s 15.8 percent and Latin America 48.7 percent. The US market accounted for 1.4 percent of total rice exported.

The fishing subsector registered a 25.1% reduction in shrimp catches. However, fish catches increased by 21.4% due to favourable local demand. The livestock subsector experienced a 9.2% shortfall in the poultry meat subsector, owing to diseases and smuggling activities in early 2019. In contrast, there were increases in the production of pork, table eggs and beef by 66.8%, 40.4% and 21.4% respectively, due to growing domestic demand.

Output of total logs and sawn wood decreased by 5.2% and 3.5% respectively. This performance was attributed to a 25% reduction in logging activities in the last quarter of 2019. However, output of roundwood increased by 1.9%, owing to favourable demand. Timber earning increased by US$0.4 million to US$33.7 million. The value of timber exports was US$33.7 million, 1.1% above the 2018 value.

The mining and quarrying sector reflected declines in bauxite and other quarrying activities that offset the gains made by the local gold industry. Gold again remains an outstanding contributor to the economy. Total gold declaration in 2019 amounted 641,828 ounces, an increase of 4.7% over 2018 declaration. The gold subsector experienced greater declarations by small & medium scale miners by 23.9%, while the combined output of the two large scale foreign companies (Guyana Goldfields Inc. and Troy Resources Guyana Inc.) declined by 26.6% to 186,584 ounces. Gold was by far the largest single export earner.  Output of bauxite contracted by 0.3% to 1,919,747 tonnes in 2019mdue to a decrease in the export volume. The diamond subsector contracted by 11.5% primarily due to weaker local demand and reduced production related investments.

The manufacturing sector recorded improvements in milled rice and other manufacturing goods, with higher production of ice cream, alcoholic beverages and detergents due to favourable demand. Conversely, production of paints, liquid pharmaceuticals and stockfeed fell due to weak local & international sales.

The construction industry experienced growth resulting from execution of public infrastructure projects, while the services sector experienced increased activities of the financial & insurance industries, wholesale & retail trade, real estate, transportation & storage and other services.

The transportation & storage subsector generated increased transport services. The storage sub-sector was bolstered by greater upstream activities for the emerging petroleum industry. Other services activities were driven by tourism, restaurant, entertainment and other personal services.

The overall balance of payments deficit contracted due to a larger capital account surplus which resulted from higher private capital inflows in the form of FDIs to the oil & gas sector. The current account deficit expanded to US$1,802.8 million compared with US$1,438.8 million in 2018. This outturn was mainly on account of an expansion in the merchandise trade and services deficits, associated with FDIs in oil and gas. The capital account recorded a surplus of US$1,766.6 million from US$1,298.6 million in 2018. This outturn reflected higher inflows to the private sector in the form of foreign direct investment inflows which increased by US$463.6 million to US$1,695.4 million compared to US$1,231.8 million in 2018.

Inflation stood at 2.1% at the end of December 2019 primarily on account of higher food prices. Foreign Reserves stood at US$ 575.9 million at the end of December, 2019, compared to US$ 528.4 million for the corresponding period last year.

The stock of outstanding public external debt fell by 1.3% to US$1,305 million from US$1,322 million at end-2018. This decline reflected lower external stock outstanding to bilateral creditors. Specifically, Guyana received a debt reduction from the State of Kuwait amounting to US$50.7 million of the US$68 million interest payments outstanding. In addition, total debt owed to Trinidad and Tobago was fully amortized during the review period. Inflows of workers’ remittances increased by 14.0% or US$46.0 million to US$373.9 million whereas receipts from bank accounts abroad increased by 7.3% or US$24.3 million to US$355.9 million.

Foreign Trade

Foreign trade is an integral part of Guyana’s national economy. Guyana is a trade dependent economy with a high reliance on tariff revenues. The main Non-CARICOM markets for Guyana’s exports and imports are USA, Canada, EU, UK. Guyana imports most of its requirements, whether in the field of industry or in the consumer sector, from other countries.

 Bilateral Trade

(In US$ Millions)

 

 

2015-16

 

2016-17

 

2017-18

 

2018-19

 

2019-20

India’s Exports to Guyana

21.87

20.07

26.03

29.66

25.21

India’s Imports from Guyana

18.48

14.48

6.59

6.42

6.95

Total Trade

40.35

34.55

32.62

36.08

32.16

India’s exports to Guyana during last five-year averages US$35.66 million, fluctuating between US$32 million to US$40 million. While India’s exports registered -8.29 growth 2016-17 over 2015-19 figure, India’s exports to Guyana rebounded with an increase of 13.95 percent in 2018-19 over the 2017-18 figure. India has positive trade balance with Guyana. Imports from Guyana has declined significantly from 2016-17 and 2018-19.

Major items of exports from India to Guyana are: Pharmaceutical products; Iron & Steel; Boilers, Machinery & Mechanical Appliances parts thereof;  Electrical Machinery & Equipment and parts thereof; Sound Recorders & Reproducers, Television Image and Sound Recorders & Reproducers and parts; Apparel and Clothing Accessories not knitted crocheted; Apparel and Clothing Accessories knitted crocheted;  Articles of Iron & Steel; Vehicles other than railway or tramway rolling stock, parts and accessories thereof;  Coffee, Tea,, Mate & Spices; Rubber and Articles thereof.

Major items of imports by India from Guyana are: Wood and Articles of Wood; Wood Charcoal; Ores, Slag & Ash; Electrical Machinery & Equipment and parts thereof; Sound Recorders & Reproducers, Television Image and Sound Recorders & Reproducers and parts; Iron & Steel; Lead & Articles thereof; Aluminium and articles thereof.

India had done some high-visibility projects with Grant assistance and under Line of Credit (LoC) in Guyana, i.e. cricket stadium, traffic lights in Georgetown and supply of 14 irrigation drainage pumps.  Currently, few other projects, as detailed below, are being undertaken under the LoC extended by the Government of India and executed through the EXIM Bank of India.  The Government of India is also actively considering and working on some other small projects such as Rice Husk Gasification Pilot Project, supplying Peanut Deshelling Machines, project for improving milk production, etc. 

  • National Cricket Stadium - completed
  • Supply and installation of 50 solar traffic lights - completed
  • Oceangoing Vessel/Passenger Ferry - under implementation
  • Construction of East-Bank East-Coast Road Linkage - under implementation
  • Acquisition of Fixed and Mobile Pumps and Associated Structures and Spares - under implementation
  • Up-gradation of three Regional Hospitals - under implementation

Projects under Government of India Grant Assistance extended to Government of Guyana include:

  • Setting up of a Centre of Excellence in Information Technology (CEIT) - completed
  • Rice Husk Gasifier - under implementation
  • Assistance for “Quick Impact Community Development Projects”- under implementation

The Hon’ble Prime Minister of India, Mr. Narendra Modi during his meeting with the CARICOM leaders in the first India-CARICOM Summit held on 25th September 2019 on the side-lines of the UNGA in New York, made three offers of assistance to CARICOM countries: (i) US$ 14 million Grant (US$ 1million per CARICOM member state) for quick impact community development projects in CARICOM countries; (ii) US$ 150 million Line of Credit (US$ 10 million per CARICOM member state) for CARICOM countries for solar energy and climate change related projects; and (iii) Special capacity building courses, training and deputation of experts based on the needs and requirements of the CARICOM countries.

Guyana - Investment

Guyana is an emerging economy with enormous untapped potential. Guyana offers to potential investors, foreign and domestic, a broad spectrum of investment choices, ranging from more traditional industries (such as mining, sugar, rice and timber) to non-traditional export sectors (such as aquaculture, agro processing, fresh fruits and vegetables, light manufacturing, value-added forest products), to services exports (such as tourism, Information Technology and IT-enabled services). The new area of investment opportunities is the Oil & Gas sector. Guyana became the newest oil producing country in the world December 2019.  Many products receive duty-free or reduced-duty treatment in destination markets. For more details visit: http://goinvest.gov.gy/investment/investment-guide/

Guyana - Banking

Bank of Guyana, the Central Bank, was established as an autonomous institution under the Bank of Guyana Ordnance No. 23 of 1965 and commenced operation on 16 October 1965. There are six Commercial Banks - Demerara Bank, Republic Bank, Guyana Bank for Trade and Industry (GBTI), Bank of Nova Scotia, Citizens Bank, Bank of Baroda - and 40 bank branches. In addition, six licensed non-banking financial institutions also offer financial services, including insurance. Cambios and exchange houses, which are spread all over Guyana, offer currency exchange and remittance services. There is no restriction on repatriation of profits and sale proceeds. Bank of Baroda is in operation in Georgetown since 1966 and has a branch in Mon Repos.

Indian Investment

Indian companies are engaged in mining and forestry operations in Guyana. Others have invested in the field of education (medical universities), banking, insurance, restaurant business, Ayurvedic Spa/Salon, pharmaceutical importation/distribution and health services. A few Indian companies have acquired agricultural land for cultivation of maize, pulses, vegetables and fruits etc. Few Indian shops/traders are engaged in import/sale of Indian consumer goods such as household appliances and items, clothing, footwear, cosmetics, artificial jewellery, etc.

Overview of Indian Economy

 

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. India's gross domestic product (GDP) was estimated to be Rs 145.65 lakh crore (US$ 2.06 trillion) for 2019-20, growing 4.2 per cent over the previous year. India retained its position as the third largest start-up base in the world with over 8,900-9,300 start-ups as 1,300 new start-ups got incorporated in 2019 according to a report by NASSCOM. India also witnessed the addition of 7 unicorns in 2019 (till August 2019), taking the total tally to 24. India's labour force is expected to touch 160-170 million by 2020 based on the rate of population growth, increased labour force participation and higher education enrolment among other factors according to a study by ASSOCHAM and Thought Arbitrage Research Institute. India's foreign exchange reserves reached Rs 37.31 lakh crore (US$ 493.48 billion) in the week up to May 29, 2020 according to the data from RBI.

Recent Developments

With an improvement in the economic scenario, there have been investments across various sectors of the economy. The mergers and acquisition (M&A) activity in India stood at US$ 28 billion in 2019, while private equity (PE) deals reached US$ 48 billion. Some of the important recent developments in Indian economy are as follows:

  • Merchandise export and import (in US$ terms) declined by 4.8 per cent and 9.1 per cent, respectively, in 2019-20.
  • Nikkei India Manufacturing Purchasing Managers’ Index (PMI) stood at 30.8 in May 2020, showing contraction in the sector because of coronavirus-related restrictions.
  • Gross tax revenue stood at Rs 15.04 lakh crore (US$ 215.28 billion) in 2019-20 - income tax collection contributed Rs 4.80 lakh crore (US$ 68.14 billion) to it.
  • In 2019, companies in India raised around US$ 2.5 billion through 17 initial public offers (IPO).
  • India's Foreign Direct Investment (FDI) equity inflow reached US$ 469.99 billion between April 2000 to March 2020, with maximum contribution from services, computer software and hardware, telecommunications, construction, trading, and automobiles.
  • India’s Index of Industrial Production (IIP) for 2019-20 stood at 129.2.
  • The combined index of eight core industries stood at 137 in March 2020. Its cumulative growth was 0.6 per cent in 2019-20.
  • Consumer Price Index (CPI) - Combined inflation was 5.9 per cent in March 2020 as compared to 6.6 per cent in February 2020. The annual consumer price inflation increased to 4.8 per cent in 2019-20 from 3.4 per cent in 2018-19.
  • Around 12 million jobs in a year were created in India during 2015-19.
  • India improved its ranking in World Bank's Doing Business Report by 14 spots over last year and was ranked 63 among 190 countries in the 2020 edition of the report.
  • India is expected to have 100,000 start-ups by 2025, which will create employment for 3.25 million people and generate US$ 500 billion in value as per Mr. T V Mohan Das Pai, Chairman, Manipal Global Education.

Government Initiatives

The first Union Budget of the third decade of 21st century was presented by Minister for Finance & Corporate Affairs, Ms. Nirmala Sitharaman in the Parliament on 1st February 2020. The budget aimed at energizing the Indian economy through a combination of short-term, medium-term, and long-term measures. Total expenditure for 2020-21 is budgeted at Rs 37.14 lakh crore (US$ 531.53 billion), an increase of 13 per cent from 2019-20 (revised budget estimates). Numerous foreign companies are setting up their facilities in India on account of various Government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, launched Make in India initiative with an aim to boost country’s manufacturing sector and increase purchasing power of an average Indian consumer, which would further drive demand and spur development, thus benefiting investors. The Government of India, under its Make in India initiative, is trying to boost the contribution made by the manufacturing sector with an aim to take it to 25 per cent of the GDP from the current 17 per cent. Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.

Some of the recent initiatives and developments undertaken by the Government are listed below:

  • The Prime Minister of India, Mr. Narendra Modi announced various economic packages, having a cumulative worth of around Rs 20 lakh crore (US$ 283.73 billion) and being almost 10 per cent of India's GDP.
  • Pradhan Mantri Garib Kalyan Package (PMGK) was introduced in April 2020 to provide relief to underprivileged and help them fight the battle against COVID-19. The budget allocated to the scheme was Rs 1.70 lakh crore (US$ 24.12 billion).
  • India is expected to attract investment of around US$ 100 billion in developing the oil and gas infrastructure during 2019-23.
  • The Government of India is going to increase public health spending to 2.5 per cent of the GDP by 2025.
  • For implementation of Agriculture Export Policy, Government approved an outlay Rs 206.8 crore (US$ 29.59 million) for 2019, aimed at doubling farmers income by 2022.
  • Under the Pradhan Mantri Awas Yojana (Urban), Government has sanctioned more than 96.50 lakh houses under PMAY(U) and approved 606 proposals for the construction of 3,31,075 houses with an overall investment of Rs 15,125 crore (US$ 2.16 billion).
  • The Cabinet Committee on Economic Affairs has approved to increase the authorized capital of Food Corporation of India (FCI) from the existing Rs 3,500 crore (US$ 500.79 million) to Rs 10,000 crore (US$ 1.43 billion).
  • India has registered a 26.9 per cent reduction in Maternal Mortality Ratio (MMR) since 2013: Sample Registration System Bulletin-2016.
  • Around 26.02 million households were electrified by 31st March 2019 under Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA).
  • In the mid-term review of Foreign Trade Policy (FTP) 2015-20, the Ministry of Commerce and Industry enhanced the scope of Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS), increased MEIS incentive for ready-made garments and made-ups by 2 per cent, SEIS incentive by 2 per cent and increased the validity of Duty Credit Scrips from 18 months to 24 months. In April 2020, Government extended FTP for one more year (up to March 31, 2021).

Road Ahead

India's GDP is expected to reach US$ 5 trillion by FY25 and achieve upper-middle income status on the back of digitization, globalization, favorable demographics, and reforms. India is also focusing on renewable sources to generate energy. It is planning to achieve 40 per cent of its energy from non-fossil sources by 2030, which is currently 30 per cent, and have plans to increase its renewable energy capacity from to 175 gigawatt (GW) by 2022. India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behavior and expenditure pattern, according to a Boston Consulting Group (BCG) report. It is estimated to surpass USA to become the second largest economy in terms of purchasing power parity (PPP) by 2040 as per a report by PricewaterhouseCoopers.

All trade/commercial enquiries may be addressed to:

Mr. Vijayakumar K.,

Counsellor (Commerce)

High Commission of India

307, Church & Peter Rose Streets

Queenstown, Georgetown

Guyana, South America

Tel: + 592 2263996/2268965

Email: com.georgetown@mea.gov.in

The following links may be useful for gaining knowledge about the opportunities for doing business with India:

Ministry of Commerce, New Delhi

Trade and Business opportunities in India

Importers and exporters yellow pages

India Brand Equity Foundation

Federation of Indian Chambers of Commerce & Industry (FICCI)

Federation of Indian Exporters’ Organisation

National Association of Software and Service Companies (NASSCOM)

Punjab, Haryana and Delhi (PHD) Chamber of Commerce & Industry

Export Import Bank of India

Engineering Export Promotion Council (EEPC India)

Projects Exports Promotion Council of India (PEPC)

Basic Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council (CHEMEXCIL)

Chemicals and Allied Products Export Promotion Council (CAPEXIL)

Council for Leather Exports

Sports Goods Export Promotion Council

Gem and Jewellery Export Promotion Council

Shellac And Forest Product Export Promotion Council (SHEFEXIL)

Cashew Export Promotion Council of India

The Plastic Export Promotion Council

Export Promotion Council for Export Oriented Units (EOUs) & Economic Zone  (SEZ) Units

Pharmaceutical Export Promotion Council

Indian Oil Seeds & Produce Export Promotion Council (IOPEPC)

Services Export Promotion Council

Apparel Export Promotion Council

The Cotton Textiles Export Promotion Council

Handloom Export Promotion Council

Powerloom Development & Export Promotion Council

Synthetic & Rayon Textile Export Promotion Council

Wool & Woollens Export Promotion Council

 

9 July 2020

Website Eco Relations 9-7-2020



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