Why in news?
Following a meeting in New Delhi on 16 October 2025, India’s Commerce and Industry Minister Piyush Goyal and Brazil’s Vice President and Minister of Development Geraldo Alckmin issued a joint declaration to expand the India–MERCOSUR Preferential Trade Agreement (PTA). The declaration aims to broaden tariff preferences, address non‑tariff barriers and set a bilateral trade target of $20 billion by 2030.
Background
MERCOSUR (Mercado Común del Sur or Southern Common Market) is a regional trade bloc founded by Argentina, Brazil, Paraguay and Uruguay under the Treaty of Asunción in 1991. The Treaty of Ouro Preto (1994) turned it into a customs union with a legal personality. The bloc’s headquarters are in Montevideo, Uruguay, and its official languages are Portuguese and Spanish. MERCOSUR seeks free movement of goods, services, capital and people among member states. Bolivia is in the process of joining as a full member, while Chile, Colombia, Ecuador, Guyana, Peru and Suriname hold associate status.
India–MERCOSUR relations
- Framework and PTA: India signed a Framework Agreement with MERCOSUR in June 2003 and a Preferential Trade Agreement in 2004 (implemented in 2009). The PTA currently covers around 450 tariff lines, offering limited duty concessions.
- Trade statistics: Bilateral trade between India and MERCOSUR was about $12 billion in 2024. Brazil is India’s largest trading partner in South America, with key exports including pharmaceuticals, chemicals and automobiles and imports of edible oil, sugar and iron ore.
- Scope for expansion: Businesses on both sides have called for broader coverage of goods and inclusion of services, investment and sanitary standards to unlock the bloc’s market of over 270 million consumers.
Key points of the joint declaration
- Substantial expansion: India and Brazil agreed that the PTA expansion should be substantial, covering both tariff and non‑tariff barriers and allowing a larger share of trade to benefit from duty preferences.
- Technical dialogue: The declaration calls for convening the Joint Administration Committee (established under Article 23 of the PTA) at the earliest to define the scope of negotiations. A technical dialogue will identify new product categories and address regulatory issues.
- Trade target: Both sides set a goal to raise bilateral trade to $20 billion by 2030, up from about $12 billion in 2024, through cooperation in energy, agriculture, technology, defence and digital sectors.
- Complementary partnership: The leaders emphasised that India and Brazil are “complementary, not competitive.” Brazil offered support in food security and renewable energy, while India pledged to share expertise in digital public goods and high‑technology manufacturing.
- Facilitating travel and investment: Brazil announced plans to introduce an electronic visa facility for Indian travellers and welcomed Indian investments in sectors such as automotive, pharmaceuticals and renewable energy.
Significance
- South–South cooperation: Expanding the PTA strengthens economic ties between emerging economies and diversifies India’s export markets beyond traditional partners.
- Market access: Wider tariff concessions could make Indian goods more competitive in South America and reduce dependence on Chinese and European suppliers.
- Strategic outreach: Engagement with MERCOSUR complements India’s broader strategy of forging trade agreements with the EU, the US and Indo‑Pacific partners, enhancing its leverage in global commerce.
Conclusion
The India–Brazil joint declaration signals a renewed push to revitalise the MERCOSUR–India trade corridor. If negotiations lead to a broader agreement, businesses across both regions could gain from diversified supply chains, deeper investment flows and strengthened South–South solidarity.
Source: Business Standard · globalEDGE