The Union Cabinet, chaired by Prime Minister Narendra Modi, has given its approval for expansion of the India-Chile Preferential Trade Agreement (PTA).
Welcoming the approval of the expanded PTA between the two countries, Eduardo Frei, extraordinary and plenipotentiary ambassador on special mission to the Asia-Pacific
of Chile, told FE, “The issues that were raised have now been resolved. We hope to ink the expanded PTA when I lead a high-level business and official delegation to India in November.”
“Under the expanded PTA, we are hopeful that the Chilean wines will soon enter the Indian market. As for opportunities in the mining sector, we are hopeful of signing a double taxation treaty with India before any projects are opened up,” Frei, former president of Chile, said.
According to the Indian ambassador to Chile, Debraj Pradhan: “Chile is a gateway to the Latin America region as well as Asia Pacific.
The expanded PTA is going to help increase our trade basket as well as open several opportunities for Indian businesses to explore various sectors.”
India’s export basket with Chile is diversified and keeping in view the wide variety of tariff lines offered by Chile, the expanded PTA would immensely benefit India. Under the expanded PTA, Chile has offered concessions to India on 1,798 tariff lines with margin of preference (MoP) ranging from 30%-100% and India has offered concessions to Chile on 1,031 tariff lines at eight-digit level with MoP ranging from 10%-100%.
Under the proposed expanded PTA, 86% of India’s exports to Chile will get covered with concessions, which is likely to result in doubling of our exports in the near future.
Talking to FE earlier, Andres Barbe, ambassador of Chile to India, had said: “The trade agreement would be in interest for both the countries. The negotiations between the two sides were finished in 2014.
However, in 2015, the Indian side had expressed some concerns over rules of origin, but these concerns are being sorted out through talks. We want Chilean products to come to India and Indian products to reach our markets.”
A PTA between India and Chile was signed in March, 2006. The said PTA came into force with effect from August, 2007. During 2006-07, Chile was ranked 51st export destination for India. Bilateral trade during the year 2006-07 was $2.3 billion.
Trade dynamics changed after the PTA came into force from September 2007. Bilateral trade registered a growth of 58.49% from 2006-07 to 2014-15. Bilateral trade during 2014-15 stood at $3.65 billion with exports at $0.57 billion and imports at $3.08 billion, respectively.
“Almost 91 % of trade between the two countries is in commodities, specifically copper, which is close to $1.7 billion, comes to India,” Barbe said, adding, “Since the PTA will include both goods and services, Chile has expertise in the services which we are keen on sharing with India.”
The two countries already have a preferential trade agreement (PTA), which covers about 400 items.
Since 2007, India and Chile have a preferential trade agreement (PTA), but the bilateral trade has fallen to $2.87 billion.
“In 2009, we agreed to start negotiations for widening the agreement, which would include new products, subject to tariff preferences, and deepening in matters related to Rules of Origin, Sanitary and Phytosanitary Measures (MSF) and Technical Barriers to Trade (TBT),” the diplomat added.