India, Latin America in talks to expand preferential trade agreement
India and MERCOSUR signed the PTA in 2004, which allowed New Delhi to forge closer economic ties with one of the world’s largest trade blocs.
PremiumNew Delhi: India and the MERCOSUR group of Latin American countries are in discussions to expand their preferential trade agreement, according to persons aware of the matter. The MERCOSUR trading bloc comprises Brazil, Argentina, Paraguay and Uruguay.
India and MERCOSUR signed the PTA in 2004, which allowed New Delhi to forge closer economic ties with one of the world’s largest trade blocs. In 2020, the combined GDP of the four MERCOSUR countries was $1.9 trillion with a total market of 295 million people.
Under the deal India and MERCOSUR have agreed to give tariff concessions ranging from 10% to 100% on 450 and 452 tariff lines respectively, according to the ministry of commerce and industry.
Both sides are currently discussing expanding the number of goods included in the agreement, according to persons aware of the negotiations, which are in their early stages.
Queries sent to the foreign ministries of India and Brazil remained unanswered till press time.
This development comes as India makes a major diplomatic and economic push toward Latin America. India’s trade with Latin America has shot up from $2 billion in 2000 to over $50 billion in 2023. This increase has largely been driven by closer economic relationships with key countries like Mexico, Brazil and Argentina. India’s automotive sector, which now counts Latin America as its largest export market, has been a particularly big beneficiary.
External affairs minister S Jaishankar has visited Mexico, Argentina, Brazil and Paraguay since 2021 and is expected to go on another visit to the region later this month. New Delhi has also expanded its diplomatic footprint in the region, having set up new missions in Paraguay and the Dominican Republic.
Latin America has reciprocated. The foreign ministers of Mexico, Brazil and Argentina were in New Delhi in March for the G20 Foreign Ministers Meeting.
Closer economic ties with India have topped their agenda. The region was badly hit by the covid-19 pandemic and its recovery may benefit from increased investment from and collaboration with India. The region’s economies are keen to attract Indian investments in a key sectors like pharmaceuticals. In an interview with Mint in January, Panama’s foreign minister Janaina Tewaney Mencomo spoke of attracting Indian pharmaceutical companies to the region, which could act as a gateway to larger markets in North and South America. Investments in energy are also of interest to both countries.
Renewable technologies like green hydrogen are of interest to Panama while Guyana seeks Indian expertise in developing its newly discovered oil reserves.
An expanded PTA with MERCOSUR will signal New Delhi’s interest in pursuing an energetic economic diplomacy agenda with the region, analysts said.
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