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India, Mercosur step up efforts to expand trade pact

India, Mercosur step up efforts to expand trade pact

NEW DELHI: India and the Mercosur bloc, comprising Brazil, Argentina, Uruguay and Paraguay, have stepped up efforts to expand their preferential trade agreement (PTA) to make greater inroads into the other’s market. The two sides, in a recent meeting, exchanged lists of items where each wants greater market access. “We are at present going through the Mercosur’s list of demand. The group wants lower duties in both industrial and agricultural products. We have to weigh our options carefully,” a government official told BusinessLine.

A PTA is a limited free trade agreement where partner countries reduce import duties on a few identified products for the other. While the PTA between India and Mercosur is presently limited to just 450 products, the two sides have raised their ambitions manifold and are now aiming at providing preferential access to about 3,000 items. “Going in for an expanded PTA with the Mercosur is in line with India’s objective of trading more with Latin America and diversifying its trade beyond the EU and the US,” the official said. India’s exports to the bloc in 2015-16 were $3.4 billion, while imports were $6.6 billion. This was just a fraction of the country’s bilateral trade with the US valued at $68.6 billion and the EU at $115 billion in the same year.

India wants to export processed foods, more engineering goods and a wider range of pharmaceuticals to the Mercosur. Under the existing agreement signed in 2009 India has brought down duties in the range of 10 per cent to 100 per cent on 452 items. These include meat products, chemicals, raw hides and skins, leather articles, wool, cotton yarn, glass and glassware, iron and steel, machinery and equipments, optical, photographic and cinematographic apparatus. India has preferential access in the Mercosur for organic chemicals, pharmaceuticals, essential oils, plastics & articles, rubber and rubber products, tools and implements, machinery items, electrical machinery and equipments. “In the expanded PTA, not only will the number items covered be greater, the margin of preference will be much more,” the official added.