India and Brazil have commenced discussions to significantly broaden the scope of their existing trade agreement, with the goal of strengthening economic ties with the Mercosur trade bloc. This move signals a renewed commitment to leveraging the South American market for mutual economic growth.
The decision to expand the Preferential Trade Agreement (PTA) was reached during a meeting in New Delhi between Brazilian Vice President Geraldo Alckmin and India's Commerce and Industry Minister Piyush Goyal. The current PTA, which encompasses approximately 450 tariff lines, is set to be transformed into a comprehensive agreement addressing both tariff and non-tariff barriers to trade, paving the way for a more robust economic partnership.
Both nations are keen to establish a technical dialogue, including a meeting of the Joint Administration Committee under the PTA, to define the parameters of the expansion. Negotiations are expected to conclude within a year. Brazil has also affirmed its commitment to coordinating its position with fellow Mercosur members Argentina, Paraguay, Uruguay, and Bolivia.
The expansion of the trade agreement is expected to unlock greater market access for Indian goods and services in South America, fostering trade diversification and enhanced economic cooperation. The agreement also aims to encourage active participation from private sector stakeholders to bolster negotiations and future collaborations in sectors such as energy, pharmaceuticals, chemicals, and Micro, Small and Medium Enterprises (MSMEs).
Bilateral merchandise trade between India and Brazil reached $12.19 billion in 2024-25, and both countries have expressed their ambition to increase this figure to $20 billion in the next five years. Brazil is currently India's largest trading partner in Latin America. In addition to trade expansion, Brazil has expressed its readiness to initiate digital partnerships in areas such as artificial intelligence and high-performance computing.
Piyush Goyal, India's Minister for Commerce and Industry, emphasized the importance of expanding the Preferential Trade Agreement with Brazil to facilitate India's deeper penetration into the South American market. He also highlighted India's strong macroeconomic story, skilled workforce, and significant consumer demand as factors attracting investment and shaping global partnerships.
This initiative follows previous efforts by Indian Prime Minister Narendra Modi and Brazilian President Luiz Inacio Lula da Silva to strengthen bilateral trade relations. The joint declaration to deepen the trade agreement demonstrates both countries' commitment to completing negotiations within a year. The expanded agreement is expected to establish preferential tariffs as the standard for a larger share of trade between the two nations.
