In line with Prime Minister Narendra Modi’s strategy of expanding India’s trade basket, third round of talks for the expansion of India-MERCOSUR Preferential Trade Agreement (PTA) is expected to take place by the end of the year.
“Talks for the expansion are back on track. There was a meeting in New Delhi recently, where a list of 484 lines was handed over to Brazil which is holding the presidency of the grouping. They have offered us the same number of lines,” a senior officer told FE. The expansion of the agreement will be of strategic importance to boost trade relations between the countries involved, and the trade volume target set at $30 billion in 2030.
“Both sides have agreed that there is an urgent need to significantly increase the number of tariff lines in the existing India-MERCOSUR PTA so that the agreement could cover a sizeable proportion of bilateral trade.”
At the next meeting, expected to take place by 2017-end, India is likely to see if it can add more tariff lines, the officer added. During the recent meeting, representatives of the member countries also discussed the current situation in Venezuela—which is a full member of the bloc since 2012.
As reported earlier by FE, India is keen on fast-tracking the process on the expansion of the PTA and negotiations on margin of preference (MoP) on the tariff lines to be offered by each side.
All South American countries (Brazil, Argentina, Paraguay and Uruguay) are linked to MERCOSUR, either as a member state or associate member. Chile, Peru, Colombia, and Ecuador are associate members of MERCOSUR, in addition to Guyana and Suriname, which acquired this status in July 2013. In December 2012, with the signing of the protocol of Accession of Bolivia to MERCOSUR, the accession process as a member state has started, however, no firm decision has been taken regarding its full membership to the grouping.
India has exchanged a wish list of 4,836 tariff lines at an 8-digit code with MERCOSUR in July last year and the MERCOSUR grouping has exchanged their wish list of 3,358 tariff lines at an 8-digit HS code.
MERCOSUR stands to benefit from India’s world class capabilities in software and pharmaceutical and export of agri-products like soybean and corn. On the other hand, India can secure its oil and other natural resource needs by partnering with the member countries.
The PTA is being proposed to be expanded as substantial scope exists for India and MERCOSUR to explore complementarities and benefits from increased bilateral trade.
The process of expansion was started earlier and the wish lists were also exchanged between India and MERCOSUR in 2010. However, the process 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.
India has offered tariff concessions on meat and meat products, organic and inorganic chemicals, dyes and pigments, raw hides and skins, leather articles, wool, cotton yarn, glass and glassware, articles of iron & steel, machinery items, electrical machinery and equipments. And MERCOSUR has offered tariff concessions related to food preparations, organic chemicals, pharmaceuticals, essential oils, plastics& rubber products, tools and implements, machinery items, electrical machinery and equipment.