India inching to sign trade pacts with Argentina and Brazil

The Indian government is in talks with Argentina and Brazil to sign trade agreements with the two largest markets in South America as it aims to strengthen commerce with the region.

India already has a preferential trade agreement (PTA) with Mercosur, a trading bloc of Argentina, Brazil, Paraguay and Uruguay which was set up in 1991 to facilitate the free movement of goods, services and capital. Officials, however, say that the bloc’s internal issues have flagged the need for bilateral agreements. 

The four-nation bloc has been grappling with various issues such as government changeovers and uncertainty over membership. Brazil has lately been pushing to deepen its relationship with India as its ties with neighbouring Argentina have deteriorated. 

“We are trying for separate pacts with Brazil and Argentina,” said an Indian official though anonymously. “These two are the biggest markets in that region and have shown interest in trade pacts.” 

Statistics show that India’s exports to Argentina in the April-September period stood at $276.34 million while imports from the country stood at  $1.16 billion. During the same period, India exported $1.65 billion worth of goods to Brazil including auto components, pharmaceuticals and petroleum products and imported $1.12 billion worth of merchandise mainly crude oil, gold, vegetable oil, sugar and bulk mineral and ores. 

“Though freight is a disadvantage, a bilateral or trilateral pact with Brazil and Argentina can be beneficial to India. Moreover, the region’s proximity to the US will be an advantage to India’s IT industry,” said director general of the Federation of Indian Export Organizations Ajay Sahai.  According to him, other countries in the region could follow suit and show interest in sealing similar agreements with India.