INDIA-MERCOSUR PREFERENTIAL TRADE AGREEMENT
Why in News?
On 14 September 2026, India and the MERCOSUR bloc signed the First Additional Protocol to the India–MERCOSUR Preferential Trade Agreement (PTA) to allow electronic Certificates of Origin (e-CoO).
About MERCOSUR
- The Southern Common Market: MERCOSUR is a South American trade bloc originally established in 1991.
- Member Nations: It comprises Argentina, Brazil, Paraguay, Uruguay, and Bolivia.
Background of the Existing PTA
- Timeline: The original PTA was signed on January 25, 2004, and officially entered into force on June 1, 2009.
- Limited Scope: Unlike a full Free Trade Agreement, a PTA offers tariff concessions only on a limited "positive list" of goods.
- Current Tariff Lines: Under the current setup, India gives preferential tariff concessions on 450 tariff lines, while MERCOSUR gives concessions on 452 tariff lines.
Need for the Expanded Agreement
- Limited Current Coverage: The existing pact excludes services and investments, leaving a vast amount of economic potential untapped.
- Trade Imbalance: Total trade between India and MERCOSUR reached $17.48 billion in 2024-25 ($8.12 billion in Indian exports vs $9.36 billion in imports), with the balance frequently tilted against India.
- Bilateral Targets: Expanding the pact aligns with strategic goals, such as scaling up bilateral trade between India and Brazil alone from $12.2 billion to $20 billion by 2030.
Expected Benefits of the Expansion
- Export Diversification: It opens up deeper market access for Indian professionals and businesses into Latin America, particularly favouring pharmaceuticals, IT, and engineering exports.
- Strategic Autonomy: A broader deal allows India to secure supply chains and diversify its trade portfolio away from over-reliance on China and Europe.
- Overcoming Trade Barriers: An upgraded FTA is expected to systematically address existing roadblocks for Indian exporters, including high tariff walls, regulatory complexities, and logistical inefficiencies.
