India looks to secure supply chains for critical minerals, petroleum with potential trade deals with Peru, Chile

With an increase in geopolitical uncertainty due to ongoing conflicts, economic slowdown in many developed countries and speculation over retaliatory tariffs, India is looking to secure supply chains for critical minerals and petroleum products with potential trade deals with Chile and Peru in South America. Government sources told CNBC-TV18 that India is aiming to get duty concessions for exports of engineering goods and other items to both these countries.

Sources indicate that while the Indian government is yet to approve the Terms of Reference (ToR) for upgrading the existing PTA (Preferential Trade Agreement) with Peru and negotiating a CEPA (Comprehensive Economic Partnership Agreement) with Chile, these discussions are advancing. India also aims to benefit from reduced freight distances due to China’s new port on Peru’s Pacific coast.

After seven rounds of trade talks with Peru up to April 2024, India is awaiting approvals from relevant ministries to proceed with the 8th round post-general elections. The 7th round of the India-Peru trade agreement negotiations had concluded after 4 days of talks in New Delhi in April this year. With an increase in trade with Peru, India aims at diversification of the import basket in terms of essential metals and minerals.

Bilateral trade with Peru has grown significantly, rising from $66 million in 2003 to $3.68 billion in 2023. Peru is now India’s third-largest trading partner in the Latin American and Caribbean region, with diversification of essential metals and minerals imports a key focus.

The 7th round of negotiations had witnessed discussions on several chapters, including Trade in Goods, Trade in Services, Movement of Natural Persons, Rules of Origin, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Custom Procedures and Trade Facilitation, Initial Provisions and General Definitions, Legal and Institutional Provisions, Final Provisions, Trade Remedies, General and Security Exceptions, Dispute Settlement and Cooperation.

Chile has also expressed a keen interest in advancing trade relations with India and accelerating negotiations for a Comprehensive Economic Partnership Agreement (CEPA). With Chile, India already has a PTA which was signed in 2005 as a follow-up to a Framework Agreement to Promote Economic Cooperation. India is also in talks with another big economic bloc MERCOSUR; comprising of Brazil, Argentina, Paraguay, and Uruguay; to widen the existing Preferential Trade Agreement.