India Pushes to Expand Mercosur Trade Pact for Stronger Latin America Ties
India is actively working to expand its preferential trade agreement with the Mercosur bloc as part of a broader effort to scale up trade and investment ties with Latin America. Commerce and Industry Minister Piyush Goyal announced this strategic move on Saturday, signaling a significant reset in economic engagement with the region.
Deepening Market Access Beyond Current Framework
Speaking at Ficci's India-Brazil Business Forum, Goyal emphasized that New Delhi is focused on deepening market access and partnerships beyond the current limited framework of the India-Mercosur agreement. "The Mercosur region is particularly important for us, and we are working to expand our India-Mercosur preferential trade agreement, to improve market access, to grow investments on both sides, to have technology partnerships, and to engage in sports, education, culture," he stated.
The existing India-Mercosur PTA, which was signed with Brazil, Argentina, Uruguay, and Paraguay, came into effect on June 1, 2009. Currently, it covers only about 450 tariff lines, and both sides are exploring ways to broaden it into a more comprehensive arrangement that better reflects modern trade needs.
Trade Momentum and Ambitious Targets
Goyal noted that trade momentum between India and Brazil has improved but remains below its full potential despite recent gains. "We have to be significantly more ambitious," he declared, highlighting that bilateral trade rose 25 percent to over $15 billion in 2025. Brazil stands as India's largest trading partner in the Latin America and Caribbean region, underscoring the importance of this relationship.
In a significant development, India and Brazil have agreed to target annual bilateral trade of $20 billion within the next five years. This ambitious goal follows talks between Prime Minister Narendra Modi and Brazilian President Luiz Inacio Lula da Silva, who also signed a cooperation pact on critical minerals to strengthen their economic partnership.
Expanding Cooperation Across Multiple Sectors
The minister highlighted that engagement between the two countries now spans a wide range of sectors, including:
- Defense and aerospace
- Energy and renewable energy
- Agriculture and agrochemicals
- Health and pharmaceuticals
- Critical minerals and aviation
Goyal also invited Brazilian companies to step up their investments in India, emphasizing the country's economic growth trajectory. "India is on track to overtake Germany within the next two years to become the world's third-largest economy," he said, pointing to reforms in taxation, logistics, manufacturing, and digital infrastructure that have reduced compliance burdens and improved ease of doing business.
Strategic Partnership in Global Supply Chains
Goyal emphasized Brazil's strategic importance due to its rich natural resources. "When we think of Brazil, we think of its rich natural resources, minerals like niobium, lithium and iron ore are vital for shaping the future of technology and global energy transition," he explained. "All of this comes together to make Brazil our strategic partner in global supply chains. Together, we have the potential to reshape global supply or value chains with resources innovation and a forward looking vision."
Brazilian Perspective on Enhanced Collaboration
Addressing the forum, Brazilian President Luiz Inacio Lula da Silva acknowledged that trade expansion potential between the two economies remains significant. "That is a lot of growth, but it is still not much if we take into consideration Brazil's and India's size," he remarked, adding that both countries are seeking stronger engagement beyond traditional markets such as Europe, the US, Japan, and China.
Silva expressed optimism that bilateral trade could eventually reach $30 billion, stating, "We decided to change this because the potential, you know, of political, economic, cultural, scientific, technological integration between Brazil and India is something which is huge in its dimension."
Key Initiatives and Future Opportunities
The Brazilian president announced several initiatives to support business collaboration, including extending visa validity for business interns from five to ten years. He also highlighted opportunities in bioenergy, noting Brazil's expertise in ethanol and fuel technologies.
"Brazil has at least 26 percent of the world's reserves of critical minerals...We want to attract the processing chain for this wealth...The agreement that we signed today with India goes in this direction," Silva emphasized.
He added that Brazil aims to expand both exports to and imports from India while strengthening technology transfer and industrial cooperation. "We want to invest and consolidate our presence in India with the transfer of technology and personnel capacity building. With the agreement signed by Embraer with the Adani and Mahindra groups, these agreements are going to allow for the production of commercial and defense aircrafts here in India," he revealed.
Sectors Identified for Deeper Collaboration
Both sides have identified several key sectors offering strong potential for deeper collaboration, including:
- Clean energy and electric mobility
- Health and pharmaceuticals
- Aerospace and defense
- Semiconductors and digital innovation
This comprehensive approach reflects a shared vision to transform the India-Mercosur relationship from a limited trade agreement into a multifaceted partnership that leverages complementary strengths and addresses global economic challenges.
