India aims to finalize FTAs with Peru, Chile, and Mexico to counter the US tariff shock
Peru, Chile, and Mexico together could absorb Indian exports worth about $17.3 billion.
NEW DELHI : India aims to conclude free-trade agreements (FTAs) with Peru, Chile, and Mexico on priority, as they could absorb about 20% of goods shipped to the US without major supply-chain changes, said three people close to discussions.
“Indian exporters stand to gain as FTAs with Peru, Chile, and Mexico could open a stronger foothold in Latin America, North America, and trans-Pacific trade, while also creating indirect linkages to Europe and Asia-Pacific markets," said the first of the three people mentioned above.
The push comes after President Donald Trump imposed 50% duties on Indian goods in August, prompting New Delhi to accelerate efforts to diversify its export basket and cut reliance on the US.
India shipped $86.5 billion worth of goods to the US in 2024-25, accounting for 20% of its total merchandise exports of $433.56 billion. “Peru, Chile, and Mexico together could absorb at least 20% of that volume, or about $17.3 billion worth of Indian goods," the third person said.
“The FTAs would particularly benefit engineering goods, textiles, and gems and jewellery, which together account for $40.01 billion of India’s exports," added the second person.
Nearly 20% of these shipments—worth close to $8 billion—could be immediately diverted to the three Latin American markets once FTAs are in place, without major supply-chain realignment.
The country exports textiles worth $10.91 billion, engineering goods worth $19.16 billion, agriculture worth $2.53 billion, gems and jewellery worth $9.94 billion, leather worth $948.47 million, marine products worth $2.68 billion, and plastics worth $1.92 billion to the US.
According to a Global Trade Research Initiative (GTRI) report, Trump's tariffs could restrict these exports by as much as 40%.
Queries sent to the Union commerce ministry remained unanswered.
The Latin leverage
India and Mexico, despite being among the largest emerging economies, do not have a formal trade agreement. The two countries signed a Bilateral Investment Promotion and Protection Agreement (BIPPA) in 2007, but it was terminated in 2019. However, a Double Taxation Avoidance Agreement (DTAA) and several memorandums of understanding in areas such as space research, biotechnology, aerospace, and pharmaceuticals remain in place.
“The government is working to expedite discussions for an FTA with Mexico or to initiate a formal trade agreement to fast-track exports," the third person added.
FTA negotiations between India and Peru began in 2017, with the seventh round held in April 2024 and the eighth in August 2025—the latest negotiations focused on access to critical minerals such as lithium and copper.
Peru’s ambassador expressed optimism that the deal could be finalized by late 2025 or early 2026, citing opportunities in technology, investment, pharmaceuticals, and clean energy.
India and Chile launched the Comprehensive Economic Partnership Agreement (CEPA) negotiations in April 2025 with the signing of the Terms of Reference. The first round, held from 26-30 May in New Delhi, covered 17 thematic tracks, including critical minerals, trade, science, and technology, while the second round was conducted virtually in August.
Diversification push
Mint first reported on 8 August that India is preparing to counter steep US tariffs by pivoting to new markets such as African and Latin American nations.
India’s trade with Latin American markets shows growing export potential, even as imports continue to outpace shipments. Exports to Peru rose from $0.92 billion in 2023-24 to $1.00 billion in 2024-25, while imports surged from $3.11 billion to $4.98 billion, highlighting a significant trade deficit, the commerce ministry data showed.
In Chile, Indian exports remained steady at around $1.15 billion in 2024-25, compared with $1.18 billion in 2023-24, while imports climbed sharply to $2.60 billion from $1.51 billion, indicating rising demand for Chilean goods in India.
Mexico is India’s largest trade partner among the three, with exports growing from $5.32 billion in 2023-24 to $5.75 billion in 2024-25. Imports moderated slightly from $3.10 billion to $2.87 billion, giving India a favourable trade balance.
“We have put in place our demand to fast-track the FTAs with these three nations, as they will prove vital for diversifying exports of engineering goods from the US to these markets," said Pankaj Chadha, chairman, Engineering Export Promotion Council.
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