India, Brazil agree to expand scope of trade pact with MERCOSUR

• India and Brazil agreed to expand the scope of the existing Preferential Trade Agreement (PTA) between New Delhi and MERCOSUR, with a view to promoting trade and investment between the Parties.

• MERCOSUR or Common Market of the South is a trading bloc comprising Argentina, Brazil, Paraguay, and Uruguay.

• This PTA has limited coverage and contains only 450 tariff lines or products. Both sides are looking at expanding the scope of this pact to a full-fledged agreement.

• The Brazilian side indicated that it will work in a coordinated manner with its MERCOSUR partners towards a substantial, swift, and mutually beneficial deepening of the agreement.

• The issue was discussed during a meeting between the visiting Brazilian Vice President Geraldo Alckmin and Commerce and Industry Minister Piyush Goyal in New Delhi on October 16.

• They agreed to set up a technical dialogue between India and Mercosur, including holding a meeting of the Joint Administration Committee created under a provision of the Preferential Trade Agreement (PTA) at the earliest mutually convenient date, with a view to defining the scope of the expansion.

What is MERCOSUR?

• The Southern Common Market or MERCOSUR (Spanish initials of Mercado Común del Sur) is a regional integration process, initially established by Argentina, Brazil, Paraguay and Uruguay, and subsequently joined by Venezuela and Bolivia.

• Venezuela, which officially joined in July 2012, was suspended from membership in 2017.

• It was established in 1991 by the Treaty of Asuncion, which was later updated in 1994 by the Treaty of Ouro Preto.

• A Framework Agreement was signed between India and MERCOSUR on June 17, 2003 in Paraguay to create conditions and mechanisms for negotiations by granting reciprocal tariff preferences in the first stage and, in the second stage, to negotiate a free trade area between the two parties

• A Preferential Trade Agreement (PTA) between India and MERCOSUR was signed in New Delhi on January 25, 2004

• The India-MERCOSUR PTA came into effect on June 1, 2009. 

Brazil is an important trading partner of India

• India and Brazil established diplomatic relations in 1948, with both countries opening the embassies in the same year. India had opened the Embassy in Rio de Janeiro, the erstwhile capital of Brazil, and later moved to Brasilia in 1971. 

• India and Brazil have shared a very close and multifaceted relationship which was elevated to ‘Strategic Partnership’ in 2006. 

• Both countries also enjoy an excellent cooperation in plurilateral fora such as BRICS, India-Brazil-South Africa (IBSA), G20, G-4, International Solar Alliance, Global Biofuel Alliance, Coalition for Disaster Resilience Infrastructure as well as in the larger multilateral bodies such as the UN, WTO, UNESCO and WIPO.

• Brazil is the largest trading partner of India in the Latin American and Caribbean region. During 2024-25, the bilateral merchandise trade stood at $12.19 billion.

• In 2024-25, bilateral trade reached $12.20 billion. There is a target to increase it to $20 billion over the next five years.

• Major Indian exports to Brazil include processed petroleum products (diesel), agro-chemicals (insecticides, fungicides), chemicals, pharmaceuticals, engineering products, textured filament yarn, and unwrought aluminum. 

• Brazilian exports to India included crude oil, soya oil, gold (non-monetary), raw sugar, cotton, gum, wood and turpentine oils, chemicals (carboxylic acids) and iron ore and concentrates.

• The Indian community in Brazil is estimated to be around 4,000 people, with the majority of them living in Sao Paulo, Rio de Janeiro and Manaus.

(The author is a trainer for Civil Services aspirants.)