Context:
Recently, India and Brazil agreed to expand the scope of the existing Preferential Trade Agreement (PTA) between New Delhi and four South American nation bloc Mercosur to boost economic ties.
Key Highlights
As part of the new roadmap, both sides decided that:
- The expansion of the pact should be substantial, ensuring a significant share of bilateral trade benefits from tariff preferences.
- It should address both tariff and non-tariff issues, including broader economic partnership areas.
- There will be active engagement with private sector stakeholders to support negotiations.
- A technical dialogue will be launched soon, including an early meeting of the Joint Administration Committee established under Article 23 of the PTA, to define the scope of the expansion.
- Both parties will endeavour to conclude negotiations within one year from the launch of negotiations.
Mercosur
MERCOSUR, or the Southern Common Market, is a South American trading bloc established in 1991.
Its full members are Argentina, Brazil, Paraguay, and Uruguay, with Venezuela suspended since 2016.
The bloc was created to promote the free movement of goods, services, capital, and people among its members and operates as a customs union with common external tariffs.
The existing PTA between India and MERCOSUR was signed in January 2004 and became operational in June 2009.
- The agreement gives tariff concessions of 10% to 100% on 450 products from India and 452 products from MERCOSUR.
- The bilateral trade between India and MERCOSUR stood at $ 17.9 billion in 2024-25 with India’s exports at $ 8.19 billion and imports at $ 9.73 billion.