Argentina - Market Entry & Business Opportunities

Argentina, located in southern South America, has a population of approximately 45 million people. The capital is Buenos Aires, and the official language is Spanish, although other languages are spoken in specific regions. The country has a diverse ethnic makeup, with European and indigenous influences. Argentina covers a large area of 2.8 million square kilometres and shares borders with several countries. The currency used is the Argentine Peso. The economy is characterized by various industries, including agriculture, mining, manufacturing, and services. Overall, Argentina offers opportunities for businesses due to its strategic location, diverse population, and abundant resources.

Economic Overview

Argentina has a large and diverse economy with abundant natural resources, including energy and agriculture. The country experienced a rebound in economic activity following the COVID-19 pandemic, with GDP growth of 10.4% in 2021. However, there are challenges such as high inflation and macroeconomic imbalances that hinder sustainable growth. In 2022, Argentina reached an agreement with the IMF for a new Extended Fund Facility program to address its debt and fiscal challenges. The program aims to achieve fiscal equilibrium by 2025 and reduce monetary financing of the deficit. Despite these challenges, Argentina offers opportunities in sectors such as agriculture, manufacturing, and high-tech industries.

Market Overview

Argentina, with a population of 47.3 million, is the third-largest economy in Latin America. The majority of the population resides in urban areas, with Buenos Aires being the largest city. The country has a skilled workforce but has faced economic challenges, including a recession and high poverty rates. Despite positive GDP growth in 2021, inflation and exchange rate fluctuations remain significant concerns. Companies operating in Argentina should navigate the complex business environment with strategic planning.

Bilateral Relations between India-Argentina

• President Mauricio Macri of Argentina visited India in February 2019, while President Cristina Fernández de Kirchner visited in 2009. Indian Prime Minister Narendra Modi attended the G20 Summit in Buenos Aires in November 2018. President Giani Zail Singh visited Argentina in 1984.
• Minister of Agriculture and Farmers' Welfare Narendra Singh Tomar held a video conference with the Argentine Minister of Agriculture, Livestock, and Fisheries in November 2020. Delegations from NITI Aayog and the Ministry of Mines visited Argentina for exploring partnerships in the mining sector.
• Foreign Minister Santiago Cafiero visited India in April 2022 for the Raisina Dialogue and held meetings with Indian counterparts. Vice President Gabriela Michetti visited India in March 2019 and met with Indian officials.
• The sixth round of Foreign Office Consultations was held in November 2021. The India-Argentina Joint Trade Committee had its third meeting in October 2020 after a long gap. The ISRO-CONAE Joint Committee, formed under the space cooperation agreement, had its second meeting in December 2020. The Joint Working Group on Agricultural Cooperation held its first meeting in July 2020. The 5th India-Argentina Joint Commission Meeting took place in January 2019.

Taxation and Subsidies in Argentina

• Argentina has expanded its tax and subsidy policies to include non-resident service providers working within the country for more than 6 months in a 12-month period.
• Non-resident companies are taxed on income generated within Argentina, while income received from Argentina is subject to withholding taxes.
• Capital gains tax applies to most gains, with a reduced rate for certain assets such as corporate bonds issued through public offerings.
• Sales taxes and real estate taxes are applied at jurisdictional levels, with varying rates.
• Financial transaction taxes exist, including taxes on deposits, withdrawals, and transactions made in banks without using a bank account.
• Stamp duty is imposed on the formal execution of public and private instruments, with special rates in specific cases.
• Argentina has double taxation treaties with 26 countries to avoid double taxation of income earned in both Argentina and the treaty partner country.

Financing Business in Argentina

Financing a business in Argentina can be done through various sources, including both traditional and alternative financing options. Here are some common methods of financing a business in Argentina:

• Bank Loans: Argentine businesses can obtain loans from traditional banks like Banco Santander Rio, Banco Macro, or Banco Galicia for working capital or investments.
• Government Programs: Argentina offers financing programs like FONDEP and AAICI, providing loans, grants, and subsidies to support specific sectors and promote foreign direct investment and exports.
• Venture Capital and Private Equity: Kaszek Ventures and NXTP Ventures are notable venture capital firms in Argentina that invest in high-growth companies, particularly in technology, e-commerce, and fintech..
• Crowdfunding: Platforms such as Idea.me and Broota enable entrepreneurs to raise funds from the public for business expansion or product launches.
• Factoring: Companies like Credicuotas and Interfinanzas provide factoring services, allowing businesses to sell accounts receivable at a discount for immediate cash flow.
• Business Incubators and Accelerators: Wayra Argentina and NXTP Labs offer financial support, mentorship, and networking opportunities to start-ups.
• Microfinance Institutions: Fundación Banco Credicoop and Fondo Esperanza provide small loans and financial services to micro-entrepreneurs and small businesses.

Top 10 Companies in Argentina – 2022

Rank	Company	Industry	Market Capitalisation (USD)
1	Mercado Libre	E-Commerce	$ 60.13 B
2	YPF	Oil and Gas	$ 11.63 B
3	Ternium Argentina	Steel	$ 7.22 B
4	TGS	Oil and Gas	$ 4.09 B
5	Aluar Aluminio	Aluminium	$ 3.93 B
6	Telecom Argentina	Telecommunication	$ 3.64 B
7	Galicia Financial Group	Banking & Financial Services	$ 2.52 B
8	Pampa Energia	Electricity	$ 2.33 B
9	Banco Macro	Banking & Financial Services	$ 1.96 B

Most Popular E-Commerce Companies In Argentina – 2022

RANK	COMPANY	Headquarter
1	Mercadolibre	Argentina
2	Fravega	Argentina
3	Amazon	USA
4	Carrefour	France
5	Ali Express	China
6	Musimundo	Argentina
7	Farmacity	Argentina

Top 5 Start-Ups in Argentina – 2022

RANK	COMPANY	Description	FOUNDED IN
1	Ualá	Banking and Financial Services	2017
2	Pomelo	Fintech	2021
3	Henry	Ed-tech	2020
4	Karvi	Automotive	2017
5	Osana Salud	Information-Technology	2019

Business Clusters in Argentina

Argentina has developed various business clusters across different industries that contribute to economic growth and competitiveness.

• Agribusiness Cluster: Key hub for agricultural production, processing, and exporting, centred in the Pampas region.
• Automotive Cluster: Well-established automotive industry with manufacturing facilities in Córdoba.
• IT Cluster: Growing IT sector with software development and IT services concentrated in Córdoba, Buenos Aires, and Rosario.
• Renewable Energy Cluster: Focus on wind, solar, and biomass energy production, with projects and companies in Buenos Aires, Córdoba, and Santa Fe.
• Renewable Energy Cluster: Focus on wind, solar, and biomass energy production, with projects and companies in Buenos Aires, Córdoba, and Santa Fe.
• Mining Cluster: Mining operations and related industries in San Juan, Catamarca, and Jujuy, focusing on minerals like gold, silver, copper, and lithium.
• Biotechnology Cluster: Research institutions and biotech companies centred in Rosario, specializing in genetic engineering and medical research.
• Creative Industries Cluster: Growing film, television, advertising, design, and gaming sectors, primarily in Buenos Aires.
• Tourism Cluster: Diverse tourism-focused businesses in regions like Buenos Aires, Patagonia, and the Iguazu Falls area.
• Health Services Cluster: Cluster of hospitals, clinics, medical device manufacturers, and pharmaceutical companies in Buenos Aires.
• Financial Services Cluster: Financial hub in Buenos Aires with banks, insurance firms, and fintech start-ups.
• Film and Audio-visual Cluster: Thriving film and audio-visual industry with production companies and studios in Buenos Aires.

How to Set Up a Business in Argentina?

Following are major steps to be taken to set up a business in Argentina:

• Decide the form of legal entity.
• Appoint a Power of Attorney
• Draft and Certify the Bylaws
• Compile Required Documentation
• Make an Initial Share Capital Deposit
• Publish the Company's Creation
• Settle the Incorporation Fee
• Register Accounting Books
• Obtain the Unique Tax Identification Code (CUIT) and open a Corporate Bank Account

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Best Locations to Set Up Business in Argentina

Argentina offers various locations that are favourable for setting up businesses. Here are some of the best locations:

• Buenos Aires: Capital and largest city, diverse business environment, access to consumer market and financial institutions.
• Córdoba: Strong industrial sector, particularly in automotive manufacturing, aerospace, and technology.
• Rosario: Major agricultural and agribusiness centre, opportunities in food processing and logistics.
• Mendoza: Renowned for wine production and tourism industry, opportunities in wine-related businesses and adventure tourism.
• Mar del Plata: Thriving service sector, including hospitality, entertainment, and retail, strong fishing industry.
• Tandil: Manufacturing and agricultural activities, favourable conditions for metallurgy, textiles, and food processing.
• Bariloche: Tourist destination, opportunities in hospitality and renewable energy.
• Salta: Diverse economy with mining, agriculture, and tourism sectors.
• San Miguel de Tucumán: Industrial centre with a focus on sugar processing, textiles, and automotive industries.
• Santa Fe: Regional centre for commerce, services, and manufacturing, sectors include machinery, chemicals, and food processing.
• San Juan: Mining activities, particularly in gold and copper, opportunities in mineral exploration and processing.
• Neuquén: Emerging oil and gas hub, investment opportunities in energy-related industries.
• La Plata: Strong focus on education and research, suitable for knowledge-based industries.
• Bahía Blanca: Port city with petrochemical and oil refining industry, growing renewable energy sector.
• Jujuy: Mining sector, particularly in lithium extraction, investment in lithium battery production.
• Santa Cruz: Mining and hydrocarbon resources, opportunities in mining operations, renewable energy, and tourism.

Visa and Immigration

• Argentina Investment Visa - The Argentina Investment Visa is for foreigners who invest at least ARS 1,500,000 in a lawful business, allowing them to stay in Argentina and eventually apply for permanent residency and citizenship.
• Argentina Business Visa - The Argentina Business Visa is for temporary business visits, requiring a letter of invitation from an Argentine company or organization specifying the purpose and duration of the visit.
• Argentina Work Visa - The Argentina Work Visa allows individuals to establish a business presence, hire foreign employees, and contribute to the local labour market by submitting relevant documentation and certifications.

To conclude, Argentia does offers various opportunities for foreign investors and entrepreneurs, but the market has its own challenges as well. Although the country has a large customer case and abundant resources, it has faced certain economic challenges covering recession and high inflation that has affected its growth. There are positive as well as negative aspects to regulatory environment and businesses needs to be very careful while navigating these uncertainties. However, with a detailed market study, a solid business plan and forging local partnerships, you can successfully enter the market and build a profitable business.

Over the past two decades, India Law Offices has built a strong global footprint by forging strategic alliances with premier law firms that empower us to serve our clients from across the globe. In Argentina, we work very closely with Estudio Willa Abogados & Consultores Tributarios, a reputable law firm headquartered Argentina that specializes in areas of taxation, corporate, banking, labour law, mergers & acquisitions, competition defence, will & trust services, accounting and auditing.

If you are from Argentina seeking legal assistance in India or an India national or corporate planning to enter the Argentina market, our firm can provide the necessary legal guidance and support you require.


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