India and Peru are getting ready to resume negotiations for a groundbreaking Free Trade Agreement (FTA), a move set to invigorate trade and investment ties between the two nations.
In an exclusive conversation with Financial Express Online on the sidelines of the recently concluded India-LAC Conclave, Teresa Mera Gomez, Vice Minister of Trade of Peru expressed optimism, sharing that the upcoming sixth round of negotiations promises to build on the fruitful results of the fifth round held in Lima prior to the pandemic. The agreement, while not a competition, seeks to complement the economic landscapes of both countries, she said.
Rekindling Bilateral Engagement
Recent developments on the sidelines of the India-LAC Conclave held in New Delhi have set the stage for an FTA revival. Peru’s Commerce Secretary, Sunil Barthwal, affirmed the continuation of FTA negotiations beyond September, emphasizing the determination to identify priority sectors for collaboration. Among these sectors, both nations have their sights set on expanding trade horizons encompassing agricultural products and vital minerals, such as gold, zinc, and the recently discovered lithium.
Diverse Aspects of the Trade Agreement
This comprehensive FTA aims to embrace multifaceted components, ranging from market access for goods and trade in services to the movement of professionals and investment facilitation. Notably, Peru stands as India’s third-largest export destination in the Latin America and Caribbean (LAC) region, enhancing the strategic significance of the pact. Anticipated subjects of negotiation encompass trade remedies, rules of origin for goods, technical barriers, dispute resolution, and customs procedures, among others.
Background
The seeds of this agreement were planted in 2017 during bilateral visits by officials from India’s Ministry of Commerce and Industry and Ministry of External Affairs to Peru. With six decades of diplomatic relations underpinning their engagement, Peru is poised to serve as a gateway to the larger LAC region, providing Indian investors with a platform for expanded footprints.
Opportunities in Gold
Peru’s prominence in the global market as a leading producer of gold, silver, copper, tin, zinc, and lead has been instrumental in fostering trade links. According to Ms Gomez, over the years, the open trade channels have witnessed increased imports of these minerals into India, solidifying the economic bridge between the two nations.
Agricultural and Lithium Prospects
According to the Peruvian minister the diverse array of products traded between the countries extends to agricultural offerings, including the renowned Red Globe table grapes, blueberries, avocados, and quinoa.
Notably, Peruvian mangoes are poised to enter the Indian market, further enriching trade ties.
Financial Express Online has reported earlier about a remarkable turn of events, Peru’s lithium reserves have surfaced as a game-changer. The discovery of high-grade lithium, exceeding deposits in Bolivia and Chile, presents a remarkable opportunity for India’s Electric Vehicles (EV) and Solar PV plans, as the country seeks to secure lithium resources for battery storage.
Setting Sail for Growth: The Chancay Port Terminal
A monumental development on the horizon is the Chancay Port Terminal—a multifaceted hub for containerized cargo, general cargo, bulk cargo, liquid cargo, and rolling cargo. This port is not just a conduit for goods but embodies the concept of a Special Economic Zone (ZEE), a pivotal element in Peru’s developmental focus. With an investment of USD 3 billion, the port promises technological, industrial, and logistical strides, aligning perfectly with the Peruvian government’s growth aspirations.
Resilient Trade Relations
Bilateral trade, while experiencing fluctuations, showcases the resilience of India-Peru ties. Amidst the challenges, the trade value stood at $3.11 billion in 2022-23, reflecting a decline from the previous fiscal. Noteworthy exports from India encompass motor vehicles, iron and steel products, and cars. On the other side, Peru’s import basket includes bulk minerals, gold, crude oil, and fertilizers.
Identified new sectors for investments
The South American nation is seeking investments in various sectors including Hospitality; Entertainment (this includes different fields); Health care (building hospitals, medical devices among other aspects).
As India and Peru embark on the journey of revitalizing their Free Trade Agreement negotiations, the stage is set for an era of unparalleled collaboration. The forthcoming round of discussions promises to build on past achievements and address critical sectors of mutual interest. With a focus on commodities ranging from agricultural produce to strategic minerals, both nations stand poised to forge stronger economic ties, ultimately fostering growth and prosperity for their peoples.