1. India-MERCOSUR trade pact: Narendra Modi govt action set to boost trade with Latin America

India-MERCOSUR trade pact: Narendra Modi govt action set to boost trade with Latin America

As India embarks on a journey to spread its wings wider in the Latin American region, it has lined up a series of initiatives to strengthen bilateral trade and economic relations.

By: | New Delhi | Updated: October 8, 2016 6:45 AM
Brookfield CEO PM Modi, Brookfield CEO India investment, Modi government Towards this, the plan is that next February, India and the members will have another round of discussions to expand the existing PTA, followed by a series of meetings by June-July.”(Reuters)

As India embarks on a journey to spread its wings wider in the Latin American region, it has lined up a series of initiatives to strengthen bilateral trade and economic relations. First among these is the move to expand the India-MERCOSUR preferential trade agreement (PTA), for which modalities have been put in place.

A group of four countries —Brazil, Argentina, Uruguay and Paraguay — have formed MERCOSUR and together they have a PTA with India and are seeking to expand it. So far, both sides have exchanged their respective wish lists. India has exchanged a wish list of 4,836 tariff lines at an eight-digit in July this year and the MERCOSUR grouping has exchanged their wish list of 3,358 tariff lines at eight-digit HS code.

Officials from the ministry of external affairs, ministry of commerce & industry, and the Indian ambassadors to the countries were part of a high-level government delegation for negotiations on a margin of preference (MoP) on the tariff lines to be offered by each side and other related issues, which concluded last week.

Sources told FE, “All the member countries have agreed to work together in a modular manner so that the expansion can be completed on time. Right now, India along with the four countries, has set 2018 for an expanded India-MERCOSUR PTA. Towards this, the plan is that next February, India and the members will have another round of discussions to expand the existing PTA, followed by a series of meetings by June-July.”

“Some of the member countries are not happy to talk about services, hence the government has to work on lines where there will be large volumes as compared with others,” the source explained.
Also, in Peru, India is working on a different model for pepping up economic relations. “There was a meeting of a joint study group on an India-Peru FTA last week in Peru. An FTA between the two countries is not going to happen soon, so the government has decided to work on a new, unique model, wherein the government has agreed to do single undertaking discussions on services investment and goods,” said an informed source.

Also, in Peru, India is working on a different model for pepping up economic relations. “There was a meeting of a joint study group on an India-Peru FTA last week in Peru. An FTA between the two countries is not going to happen soon, so the government has decided to work on a new, unique model, wherein the government has agreed to do single undertaking discussions on services investment and goods,” said an informed source.

According to Peru embassy officials in New Delhi, “India is an important market with a great potential for development.” The Peruvian government has invited Indian businessmen to invest in the country for the construction of roads, highways, ports, airports, telecommunications and energy, and take advantage of its tourism spots to boost bilateral tourism ties. The country is also keen on tapping India for space technology. Peru has signed 40 FTAs across the world, including with China and the European Union.
According to sources, “MERCOSUR stands to benefit from India’s worldclass capabilities in software and pharmaceutical industries and exports of agricultural products like soybean and corn. On the other hand, India can secure its oil and other natural resource needs by partnering with the grouping’s member countries.” The process of expansion was started earlier and the wish lists were also exchanged between India and MERCOSUR in 2010. However, the process of expansion could not proceed further. India had earlier exchanged its wish list containing around 1,287 tariff lines at an 8-digit code at HS 2007 nomenclature.

Besides huge opportunities in fertilisers and lithium, there is a big potential in the areas of agriculture, livestock and food processing. Both India and Argentina are major producers of food and have quite a diversified industrial base.

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