India and Chile are set to begin negotiations for a Comprehensive Economic Partnership Agreement (CEPA) with a focus on expanding trade and cooperation in areas like digital services and critical minerals. The first round of negotiations is scheduled to take place in New Delhi from May 26 to 30. This move signifies a deepening of the strategic partnership between the two countries, building upon the existing Preferential Trade Agreement (PTA).
The terms of reference (ToR) for the CEPA were signed on Thursday by Juan Angulo, the Chilean Ambassador to India, and Vimal Anand, Joint Secretary in the Department of Commerce and the chief negotiator for India-Chile CEPA. The CEPA aims to broaden the scope of the existing PTA to include sectors such as digital services, investment promotion and cooperation, MSMEs, and critical minerals. This expanded agreement is expected to enhance economic integration and cooperation between the two nations.
India sees Chile as a "gateway to Antarctica" and a key partner for securing critical minerals. These minerals are essential for sectors like electric mobility, renewable energy, and electronics manufacturing. Chile is a global leader in the production of copper and lithium, which are vital for India's industrial growth and sustainable energy transition. By securing a trade deal with Chile, India aims to diversify its sources for these strategic resources and reduce its dependence on other countries.
The CEPA is expected to unlock the full potential of the trade and commercial relationship between India and Chile, boosting employment, facilitating investment promotion and cooperation, and enhancing exports. This aligns with the recommendations of the Joint Study Group (JSG) established under the Framework Agreement between the two countries. The JSG report, finalized and signed on April 30, 2024, highlighted the potential benefits of a deeper economic partnership.
The shared vision for strengthened bilateral relations was further reinforced during the recent state visit of Chilean President Gabriel Boric Font to India from April 1 to 5, at the invitation of Prime Minister Narendra Modi. During the visit, both leaders acknowledged the strong foundation of trade and commerce in their bilateral relationship and emphasized the importance of enhancing the existing trade framework to unlock new opportunities for growth.
India's trade deficit with Chile stood at $1.3 billion in 2024, with exports of $1.1 billion and imports of $2.4 billion. In FY25, India's exports to Chile were $1.15 billion. Key export items include engineering goods, drugs and pharmaceuticals, yarn, ready-made garments, marine products, and leather goods. The CEPA is expected to boost exports and diversify the trade basket between the two countries.
Both sides have reiterated their commitment to strengthening bilateral relations and look forward to fruitful discussions during the first round of negotiations. The CEPA aims to establish a balanced, ambitious, comprehensive, and mutually beneficial agreement for deeper economic integration.
