The BRICS TimesIndia and Brazil are working together to counter U.S. President Donald Trump’s tariff measures. New Delhi may soon hold talks with the Brazil-led Latin American trade bloc to explore possibilities of a Free Trade Agreement.
Facing some of the steepest tariffs imposed by the United States, India and Brazil are now moving closer to forming a joint strategy. According to media reports, government sources have indicated that India may hold a virtual meeting with the MERCOSUR trading bloc as early as next week, where discussions are likely to center around a Free Trade Agreement (FTA). Notably, India already has a Preferential Trade Agreement (PTA) with MERCOSUR, signed back in 2004. MERCOSUR, led by Brazil, is a key South American regional trade organization whose other members include Argentina, Uruguay, and Paraguay.
As reports suggest, India is actively seeking fresh export markets to cushion the effects of the global economic slowdown in developed countries, coupled with the recent tariff barriers imposed by the United States. Earlier this year, Prime Minister Narendra Modi met with the presidents of Brazil, Argentina, and Paraguay to strengthen trade relations. Furthermore, the Vice President of Brazil is expected to visit India next month, underscoring the growing importance of this partnership. It is worth mentioning that Washington has imposed tariffs of up to 50 percent on both India and Brazil, the highest among its trading partners.
Sources reveal that Latin American countries are equally eager to explore new trade partners and view India as a promising market. For New Delhi, opening up to these nations is seen as relatively safe since the range and scale of their exports remain limited, minimizing risks to India’s domestic industries. To boost trade, multiple options are on the table. These include expanding the current PTA, which presently covers around 450 product lines, to as many as 4,000 products, or negotiating a comprehensive FTA. Such a deal could include provisions for the movement of skilled professionals and strict rules of origin to prevent third-country dumping or trans-shipment.
The economic strength of MERCOSUR nations further highlights the potential of this alliance. Collectively, the South American economy stands at $4.38 trillion, with MERCOSUR members accounting for over 67 percent of this, totaling around $2.94 trillion. Sources further disclosed that within MERCOSUR itself, there are ongoing discussions to elevate the existing PTA into a full-fledged FTA. For Indian exporters, such an agreement would unlock access to vast South American markets, while also paving the way for entry into Caribbean and Pacific economies, where MERCOSUR nations often serve as major trans-shipment hubs.
