Aiming to increase current bilateral trade with India from $1.5 billion to $2 billion, Peru is looking to take the proposal of FTA with the Narendra Modi government.
“The 3rd round of joint study group on FTA with Peru is slated to meet shortly, discussing key features of the proposed FTA between the two partners,” Indian Ambassador to Peru, Sandeep Chakravorty, told FE.
“There will be an official delegation from the ministry of commerce that will be in Lima for the talks,” Chakravorty said.
The deal that could potentially bring trade up to $2 billion with India, the free trade agreement (FTA) could “concretise” in the second half of 2016 as the South American nation is heading for elections.
Peru means a “great market for India” and a “great opportunity”, according to the Indian envoy. “The country has no negative growth. The mainstay is mining. However, Indian investors should explore opportunities for investments in various sectors, including mining and financial institutions.”
The commercial exchange between India and Peru has almost doubled in the last few years, which has made the FTA possibility relevant. Currently, Indian investments have been made in Peru in mining, information technologies, and pharmaceuticals.
The FTA will just not be for goods and services, it will be a comprehensive one that will have a holistic impact with even movement of people eased. “Peru got permission to sell gold to India in 2011. We began exporting in 2012 and shipped out 106 million ounces. In 2013, we exported 270 million ounces. This year, it will be even higher,” said a Peruvian diplomat. The Latin American nation is the sixth largest gold producer, mining 5 million ounces every year.
Peru is also the second largest producer of silver and the third biggest producer of copper, tin, zinc and lead.
“We have proposed to India a free trade agreement. In return for our minerals and metals, we would avail of your IT and other products such as agricultural produce,” he said.
“Once the FTA is in place the gold from Peru can come in directly in dore form, India will save precious foreign exchange spent on refining, while ensuring that the manufacturing facility in India can be used. In India, the MMTC-Pamp Refinery uses these dores to refine gold and make products such as coins and bars.”
“Trade with India is growing at 25% (year-on-year) without FTA, with the expected trade agreement, we could soar to 60-70%. By the end of 2015 we expect bilateral trade to reach $2 billion.”
This comes at a time when the Indian government is to review its free trade agreements with several countries including with the Asean region. It is set to push similar pacts with countries in Africa and South America as part of its strategy for larger engagement with countries having potential to provide Indian entities larger scope or investments.
The Modi-led NDA government has indicated that it will review several of the FTAs India has inked over the years, especially those that has resulted in loss to the Indian industry. But at the same time it is pushing for active engagement with Latin American countries expanding the scope of bilateral trade and providing ground for more investment by Indian companies.
Indian companies such as TCS have IT operations in the Andean nation and are said to have employed more than