Economy of Chile is characterized by a high level of foreign trade. The country enjoys varied natural resources, skilled labor and effective administrative structures. Chile`s reputation as a role model for economic reforms was strengthened when the democratic government took over from the military rule in 1990.

Chile`s economy growth has been 5-7% over the last several years. In 2006, Chile became the country with the highest nominal GDP per capita in Latin America. The public and private investment in the Chilean economy has remained high. The government recognizes the necessity of private investment to boost workers productivity. The government also encourages diversification to non–traditional exports of fruits, wine and sea food to reduce the relative importance of basic traditional exports of copper, timber and other natural resources.

Chile`s welcoming attitude towards foreign direct investment is codified in the country`s Foreign Investment Law, which gives foreign investors the same treatment as Chileans. Registration is simple and transparent. Foreign investors are guaranteed access to the official foreign exchange market to repatriate their profits and capital.

Indo – Chilean bilateral trade relations
Chile was the first country in South America which signed a trade agreement with India as far back as 1956. The trade between the two countries has grown substantially to reach record levels each way. The bilateral trade has now reached to USD 2.2 billion in 2007.

Chile is one of the region's most dynamic and promising markets. Its strength and attractiveness lie not in its size (population 15 million), but in the energy and professionalism of its entrepreneurs, the transparency of its regulations, and the predictability of its decision-makers. Market-led reforms over the past 25 years and an increasingly diversified economy with strong ties to buyers and suppliers in the Americas , Europe , and Asia have given Chile a wide range of options for further growth. Prudent economic policy-making has secured long-term stability unknown elsewhere in Latin America . Preferential Trade Agreement (PTA) which was signed in Delhi in March, 2006 came into force on August 16, 2007 .

The PTA includes three annexes on Rules of Origin, Dispute Settlement Procedures and Preferential Safeguard Measures. In addition, it also includes two other annexes, which contain the list of products on which India and Chile have offered tariff preferences to each other. While India has offered tariff preferences on 178 products at the 8-digit level to Chile , Chile has offered tariff preferences on 296 products at the 8-digit level to India . The margins of preference, which mean the reduction on applied rate of import duty, offered by India range from 10% to 50%. The margins of preference offered by Chile also range from 10% to 50%, with four products offered at 100% margin of preference. These four products correspond to sheath contraceptives, metal needles and needles for sutures, catheters and other surgical instruments. Chile has offered 50% margin of preference on some pharmaceutical products and chemicals. India has offered 50% margin of preference to Chile on several leather products, split and unsplit grains.

Chile has one of the region's simplest and most transparent regulatory systems for trade and business, but foreign companies should carefully review Chilean regulations to ensure trouble-free operations. Chile does maintain import and export licensing requirements, but this is primarily for the purpose of gathering statistical data. Only agricultural products and a few sensitive items face significant restrictions.

Chile is a particularly promising market for exports of high technology and capital goods. However, while there are ample opportunities for foreign goods and services of all types in Chile , competition is stiff, especially from countries such as Canada , Mexico , and the European Union, which have previously negotiated free trade agreements with Chile . The United States and China are Chile 's main trading partners and their largest suppliers as well.

Over the last two decades, Chile has avoided many of the persistent economic problems that have plagued some of its neighbors. Prudent economic policy-making and a strong focus on diversified trading links with North and South America, Europe, and Asia have provided Chile with stable long-term growth unknown in most of Latin America. In fact, capitalizing on its reputation as a reliable trading partner (thanks to the availability of a skilled workforce, reliable and inexpensive telecommunications services and good transportation links, especially by air), Chile is working to position itself as the logical choice for foreign firms looking to establish a South American regional hub. Chile is the only investment-grade economy in South America . As of December 2007, Chile has been ranked among the top 30 best world economies according to a Standard & Poor risk classification report. The report gave Chile a grade of “A+”, an improvement from the previous “A” awarded January 2004. The ranking reflects each country’s solvency with respect to its foreign debt as well as its openness to foreign investment, legal transparency, and political stability. Overall, Chile received the highest credit ranking of any emergency economy. S&P placed Chile in the same category with countries such as Italy, Iceland and Russia and higher than China, South Korea and India.

Over the last 20 years, Chile has witnessed the most impressive real growth rates in its history. From 1987 to 1997, Chile 's GDP (Gross Domestic Product) grew an average of 7.9%. While the world economy entered recession, Chile 's economy managed to grow at an average of 2.6% from 1998 to 2002. From 2003 to 2007 Chile grew at an average 5%. The government of Chile and several independent economists estimate the economy will grow 3.9% in 2008.

A strong, independent central bank maintains a prudent fiscal management that kept Chile 's inflation within a target range of 2% to 4% up to 2006. W idely influenced by rising demand for goods in the international economy and escalating energy costs, Chile ’s inflation went up to 7.8% in 2007. The consumer price index rose by 1.5% in June, 2008, which brought inflation for the 12-month period through June to 9.5%, the highest level since 1994.. The world economic crisis has put pressure on Chile in recent months, particularly since Chile heavily imports goods like petroleum and gas that are not produced domestically.

Establishing a Business
Incorporating in Chile is not expensive and takes about two months. Chile has no minimum local participation requirement; the inclusion of local partners is guided only by commercial considerations.

The first step for a foreign citizen, corporation, or entity wishing to establish a business in Chile is to present a declaration of intent to invest in Chile to a Chilean Consulate, stating the nature of the business and the capital to be invested, while simultaneously requesting a Permanent Residence Visa. This confers official residence status on the company (no one can conduct commercial activities in Chile without it).

Within the framework of Chilean law, business entities can choose to set up in a variety of corporate forms, each with different legal and tax implications. Chile and India are currently negotiating a Double Taxation Avoidance Agreement.

Distribution / Sales Channels
Establishing a local subsidiary or branch office gives the best guarantee that the exporter will receive efficient service and appropriate promotion of its products. Any corporation legally constituted abroad may form, under its own name, an authorized branch in Chile . This method of market penetration may involve a considerable investment, but can be justified if sales are large in volume or when local service support and/or inventory are necessary.

Another practical and more common market entry strategy is to appoint an agent or representative with good access to relevant buyers and with technical expertise. Distances are great in Chile , so larger representatives usually have branch offices in different regions.

Agents / Distributors: Finding a Partner
About 3,000 importers currently operate in Chile; some of them also act as export agents. Most are small- to medium-size firms. Several large firms handle multiple lines of products and are large wholesalers. Almost all the firms have their main offices in Santiago. The larger ones have branch offices throughout the country, including the free-trade zones of Iquique and Punta Arenas. Other firms employ specialized traveling salesmen.

In general, foreign suppliers enter the Chilean market by appointing an agent, distributor, or wholesaler. Agent/representative commissions normally range from 5% to 10%, depending on the product.

The selection of a Chilean agent or representation is an extremely important decision for foreign exporters, which merits a thorough review of possible candidates and their qualifications and capabilities.

Internet use in Chile is growing rapidly. While in 2002 the number of Chileans having access to internet was 2 million people, in 2007 the number went up to some 7 million people, which is around 50% of the population.

In terms of e-commerce, it is estimated that 25% of Chileans will buy over the Internet and total sales via the Internet will reach US$12 billion annually in Chile this year. The government of Chile supports the development of the Internet and is fostering a public-private alliance to increase access to the Internet, create secure and trusted methods of payment and certification, and enhance product distribution throughout Chile .

Selling Factors / Techniques
Depending on the product or service, price can be the key sales factor in Chile. Price-competitive products from places such as China, Taiwan or South Korea often outsell more expensive European or North American products, especially in consumer product categories such as electronics, appliances, and automobiles.

Where dependability is more important (e.g., advanced electronics and construction machinery), the customer often prefers more expensive North American or European products. While price remains a factor in purchasing decisions, considerations of quality, durability, technology, customer support, and availability of service also influence purchase decisions, with the order of importance depending on the industry, the customer, and the application.

Many of the larger distributors and representatives have regional offices in addition to their Santiago headquarters, or work with a commissioned sales force to cover all of Chile . More technical product categories are generally sold by traveling salesmen who demonstrate products in client's offices. Technical support personnel often assist salesmen during client visits.

Cable television reaches an estimated 1.08 households in Chile . By December 2006 about 24% of the population had cable television. However, it is projected that by 2010 it will reach 60%. Two major cable systems (Metropolis-Intercom and VTR-Cablexpress) operate in 95% of the country. Both broadcast all local stations and major international channels from the United States, Italy, France, Germany, Argentina, Brazil and Mexico (U.S. offerings include CNN International, HBO Ole, MTV, TNT, Worldnet, ESPN, Cartoon Network, and MSTV). Indian Channel ZTV is also available on request and payment basis.

Chile 's value-added tax (called IVA) was raised to 19% as of October 1, 2003 . Any tariff and value added tax is usually paid by the importer, not by the supplier. There are some exceptions: government entities do not pay these fees and some luxury goods have higher tariffs, called luxury tax.

Need for a Local Attorney
Because contracts with Chilean firms must abide by Chilean laws, foreign companies entering the Chilean market should have all legal documents drawn up or checked by a qualified legal counsel.

Suppliers can establish their legal relationship with a local representative in one of two ways: an ordinary work contract regulated by Labor Law 19.010, for which some legal guidance is advisable, or the more customary commercial or commission contract, by which the parties establish their own terms and conditions and are not bound by requirements of Law 19.010, especially its severance conditions.

Trade Barriers

• Chile generally has few barriers to imports or investment. Foreign firms operating in Chile enjoy the same protection and operate under the same conditions as local firms. In general terms, the import business finds nearly no restriction in this country:

• Import duties have been reduced to a current 6% on nearly all products from most countries, although many products from countries with which Chile has trade agreements enter with lower or no duties.
  
• The home industry is in no way subsidised or protected.
  
  
• Taxes are equally applicable to local manufacturing and imports.

• Trade barriers are, therefore, restricted to a few yet strict technical regulations applicable to a reduced number of sectors, particularly agricultural, livestock, chemical and pharmaceutical items. These rules are not intended to stop imports. Chile having been declared free of pests and diseases such as the fruit fly and the foot-and-mouth disease, such technical norms are rather intended to protect the local people, livestock and agricultural sectors from contagion. The standardisation of sanitary and phyto-sanitary trading regulations has, therefore, become a main issue for concern.

Following are the local organisations in charge of issuing and enforcing Chile’s technical regulations:

The Ministry of Health
through the Chilean Institute of Public Health (ISP) and the Metropolitan Environmental Health Service (SESMA) are responsible for food sanitation; approval of food ingredients; labelling and packaging of processed food; product registration, testing, certification and analysis of chemicals, agro-chemicals and finished pharmaceuticals.

RESTAURANT
Business lunches and breakfasts are common and offer of Indian hospitality is appreciated in Chilean business circles. There are presently only two Indian restaurant in Santiago:

Electricity
Electricity supply in Chile is 220 Volts / 50 MHz.

MEDICAL ATTENDANCE
In case of necessity, emergency services of Santa Maria Clinic, Clinica Alemana, Clinica Indisa and Clinica Las Condes may be utilized. Following are their contact details:

Clinica Santa Maria
Avenida Santa Maria 0410
Santiago, Chile
Phone: 461 3001

Clinica Alemana
Av. Vitacura 5951
Santiago, Chile
Phone: 2101334

Clinica Las Condes
Lo Fontecilla 441
Santiago, Chile
Phone: 2105150

Clinica Indisa
Avenida Santa María 1810
Santiago, Chile
Phone: 3625555

TIME DIFFERENCE AND WEATHER
Chile is 9 1/2 hours behind India from March to October and 8 ½ hours behind India from October to March. The winter is from May to October and summer from December to March. The summer is mild with maximum temperature reaching up to 32 Degree Celcius, while minimum temperature in winter can go down up to 0 degree or –1 degree Celsius. It does not snow in Santiago. Santiago is situated in a valley and is surrounded by mountains. Due to geographical factors, the pollution does not escape and accumulates in the atmosphere, making it one of the most polluted cities in the world. Visitors suffering from respiratory ailments or eye diseases should be extra careful, particularly during winter months.