India’s relations with the Latin American and Caribbean (LAC) region are underpinned by strong trade and investment links which have strengthened and deepened in a short span of time. This region, comprises of 33 sovereign countries and 7 overseas territories, rich in natural resources and also has vast tracts of fertile land. The value of trade between India and Latin America and Caribbean countries amounted to over 27 billion U.S. dollars in fiscal year 2020.
The rising importance of the LAC region is evidenced by the increase in India's bilateral trade share of 5.95% of its total world trade.
Brazil is India’s major trade partner in the region. Brazil and India are both members of BRICS, IBSA and the G20. 19 India’s other important trading partners in the region are Venezuela, Argentina, Chile, Columbia, and Peru. India’s export basket, except in respect of Brazil, is largely dominated by commodities such as crude oil, iron ore, copper, sugar, soya, cereals etc.
India has a Preferential Trade Agreement with MERCOSUR (a trading block of Argentina, Brazil, Paraguay, Venezuela, and Uruguay) which was signed on 25 January 2004 and came into operation from 1 June 2009. In 2006 it was agreed to expand this agreement by enhancing both the number of products covered and tariff concessions offered. Though, the process of expansion of the India-MERCOSUR bilateral agreement has remained a non-starter. The MERCOSUR region itself has been going through some churning. The fact that it has some of the most significant markets of Latin America, makes this region quite important. Deepening and widening of the India-MERCOSUR PTA is an important part of the agenda for this region. The India-Chile PTA is in the final stages of expansion. Chile is a promising market and expansion of this agreement will help in broadening India’s export basket.
Mexico, Chile, Peru and Colombia form part of a regional economic group known as the Pacific Alliance. India has been officially accepted as an „Observer member of the Pacific Alliance in February 2014, which increases the scope for a much straonger and deeper engagement.
India’s public and private sector companies are looking for new investment opportunities in this part of the world. From the food security point of view, the region offers excellent opportunities for large-scale farming and most of the produce could be re-exported to India. Further, the LAC region can be an excellent source of minerals for India’s growing industry. Airline and shipping connectivity issues with the region also need to be addressed in order to reap the full benefit of this growing trade relationship.