India seeks FTAs with Latin American nations: In an increasingly fragmented global order marked by rising protectionism, India is recalibrating its trade strategy to reduce dependence on traditional partners such as the United States, the European Union, and China. The recent signing of the Comprehensive Economic and Trade Agreement with the United Kingdom highlights this shift. It is India’s first major trade deal with a G7 country in over a decade and signals a renewed momentum in forging bilateral economic partnerships. Building on this momentum, India is now turning its focus to Latin America, a region rich in resources but long overlooked in New Delhi’s trade calculus.
As part of this expanded outreach, India is pursuing Free Trade Agreements (FTAs) with Peru, Chile, and the Mercosur bloc, even as China deepens its economic footprint across Latin America. These agreements are intended to secure India’s access to critical minerals and new export markets while limiting the risks posed by third-country dumping — an issue that has plagued India’s previous FTAs. The cautious approach reflects lessons from the ASEAN agreement and underlines India’s intent to ensure that future trade pacts serve both strategic and economic interests.
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Modest trade, growing interest
India’s trade with Latin America remains modest but is gaining traction. In FY25, Latin America accounted for 3.5% of India’s total exports, valued at $15.17 billion. The region’s key partners include Brazil, Mexico, Chile, and Peru. India’s exports—primarily pharmaceuticals, textiles, chemicals, and automobiles—are complemented by imports of copper from Peru, lithium from Chile, agricultural commodities, and petroleum.
Indian companies are establishing a growing presence in the region. Tata Consultancy Services now employs around 2,000 people each in Peru and Chile, while Indian pharmaceutical firms have made strategic inroads, reflecting the country’s broader push into Latin America’s technology and healthcare sectors.
Risks of Chinese re-routing
Despite the promise, multiple concerns persist. Chief among them is the potential misuse of trade channels for re-export of Chinese goods. The Indian government is wary of Latin American nations flouting ROO provisions—a problem it has already encountered with the ASEAN bloc. Under the India-ASEAN FTA, Chinese manufacturers have exploited loopholes to dump goods into India via intermediary countries.
Officials in New Delhi are therefore pushing for watertight ROO clauses in the proposed FTAs with Peru and Chile. The goal is to ensure that goods benefiting from preferential access are genuinely produced in the exporting country, not relabelled or repackaged Chinese products.
This precaution is not without precedent. India’s trade pact with the United Arab Emirates included similar concerns, prompting a re-examination of its broader FTA architecture. The Commerce Department is now particularly vigilant in ensuring that any new agreement avoids opening the floodgates to Chinese goods under the guise of liberal trade norms.
Negotiation timeline and strategic posture
India is scheduled to hold the second round of FTA talks with Chile and the eighth round with Peru in August. Talks with both countries had stalled as India reassessed its overall FTA approach, but momentum has since resumed. While both Latin American countries are eager to conclude negotiations quickly, India remains cautious. Officials are clear that they would prefer delays over signing a deal that replicates the flaws of past agreements.
This deliberate pace is not without political signalling. It reflects a matured trade posture—one that prioritises long-term strategic value over short-term gains or diplomatic expediency.
China’s head start
India’s efforts in Latin America come against the backdrop of China’s decade-long head start. Beijing signed FTAs with Chile in 2005 and Peru in 2009, giving its exporters preferential access to these markets. Since then, it has upgraded these agreements to cover a broader range of goods at lower tariffs.
China’s economic engagement extends beyond trade. Infrastructure investments such as the $3.6 billion Chancay port in Peru—commissioned in November 2024 under the Belt and Road Initiative—strengthen Beijing’s logistical control and deepen its influence. The port will serve as a gateway for Chinese exports to the continent, further tightening the grip of Chinese supply chains in the region.
In 2024 alone, Peru imported goods worth $14.53 billion from China—28% of its total imports. Chile’s imports from China were even higher, at $20.65 billion. The product basket includes electronics, steel, vehicles, textiles, and IT equipment, underscoring the breadth of China’s dominance.
Vigilance on market access and dumping
To counterbalance this, India’s trade negotiators are scrutinising the market access requests from Chile and Peru. The focus is to ensure that any duty concessions granted are for goods genuinely manufactured in these countries—not proxies for Chinese exports. While there is a broader global shift toward more liberal ROO regimes, India is unwilling to compromise on this front.
The experience with ASEAN and UAE has made the government doubly cautious. It will likely insist on robust verification mechanisms and tighter customs protocols before agreeing to any comprehensive trade arrangement.
A resource-rich opportunity
The strategic case for engaging Latin America remains strong. Countries like Peru and Chile are rich in copper and lithium—minerals critical to India’s green energy transition and electric vehicle ambitions. Deeper trade and investment ties could help India secure access to these essential inputs at competitive rates.
The Prime Minister’s recent visit to Brazil, Argentina, and other Latin American nations underlines the importance being accorded to this pivot. While Brazil ranks India as a top-10 trading partner, the reverse is not true—highlighting the untapped potential in bilateral trade and investment.
This shift also reflects a larger strategy: to build South-South alliances that are less vulnerable to geopolitical headwinds from the West or China.
If India is to succeed in Latin America, trade agreements must be accompanied by better physical and digital connectivity. Direct air and maritime routes, easier visa regimes, and deeper financial cooperation could accelerate business ties. At present, the sheer geographical distance remains a logistical and psychological barrier to closer commercial engagement.
As India heads into the next round of negotiations in August, the stakes are high. Latin America, at a geopolitical crossroads, offers India an opportunity to craft a more diversified, resilient trade architecture. But success will hinge on staying vigilant against third-country misuse and ensuring that each deal serves India’s long-term economic and strategic interests.