Why in news?
Recently, India and Brazil announced a joint declaration to significantly expand this PTA to cover both tariff and non-tariff issues, with the goal of increasing bilateral trade from the current USD 12.2 billion to USD 20 billion by 2030.
 
Key Features of India-MERCOSUR PTA Expansion

• The expansion will include broader tariff concessions and address non-tariff barriers to facilitate more trade.
• A technical dialogue led by the Joint Administration Committee will define the scope and modalities of the expanded deal.
• The original PTA, signed in 2004 and implemented in 2009, covers around 450 tariff lines with limited duty concessions.
• The PTA includes tariff concessions, rules of origin, safeguard measures, and dispute settlement mechanisms.

About MERCOSUR

• MERCOSUR is a regional trading bloc established in 1991 by Argentina, Brazil, Paraguay, and Uruguay, later joined by Venezuela and Bolivia.
• It functions as a customs union with common external tariffs and coordinated trade policies.
• It is the world's fourth-largest integrated market, the sixth-largest economy by GDP, and has a population of about 270 million people.
• The headquarters is in Montevideo, Uruguay.

Significance for India

• It strengthens South-South Cooperation within groups like BRICS, G20, and IBSA.
• Enhances Indian product competitiveness in Latin America, reducing dependence on Chinese and European suppliers.
• India's exports to MERCOSUR were USD 8.12 billion in FY 2024-25, with imports at USD 9.36 billion, primarily from Brazil.
• The agreement complements India's broader trade diversification strategy including FTAs with the EU, US, and Indo-Pacific nations.
• There are opportunities in agricultural imports, energy resources, and raw materials from MERCOSUR, while India exports pharmaceuticals, engineering goods, and IT services.

Challenges

• MERCOSUR countries have strong agricultural protectionism, limiting access for key Indian products like sugar, pulses, and dairy.
• Economic asymmetry exists as MERCOSUR is commodity-export oriented, while India has a diversified manufacturing and service economy.
• Consensus among all MERCOSUR members is required, which slows decision-making.
• Infrastructure, logistics, non-tariff barriers like technical regulations, and customs procedures pose challenges.

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