India to hold subsequent round of negotiations for potential FTAs with Chile, Peru in August

Government sources have told CNBC TV18 that India is slated to hold the 2nd round of negotiations with Chile and the 8th round of negotiations with Peru for separate, potential Free Trade Agreements (FTAs) with both countries.

As China’s control on exports of rare earth magnets continues to impact supplies across the world, government sources had told CNBC TV18 last month that India is looking to hedge supply chain risks by exploring alternative sourcing destinations like Australia, Argentina, Brazil, and Chile.

Currently, China produces around 60% of the global supply of rare earth magnets, and processes around 90% of the supply, which also involves sourcing of raw materials from other countries.

Rare earth elements (REE) and processed minerals are extensively used in heavy industries, robotics, batteries, and military equipment.

Having held the 1st round of negotiations in May for a proposed comprehensive FTA, India and Chile had implemented a preferential trade agreement (PTA) in 2006, which is now being widened in scope to negotiate a Comprehensive Economic Partnership Agreement (CEPA).

The PTA signed in September 2016 and has been effective since May 2017, will act as the building block for a potential CEPA covering a broader range of sectors, including critical minerals, digital services, MSMEs (micro, small, and medium enterprises), and investment promotion and cooperation.

While bilateral trade remains modest, India’s imports from Chile in FY 2024-25 grew 72% year-on-year to reach $2.60 billion, amidst 2.46% year-on-year dip in exports taking the FY’s export figure to $1.15 billion.

Chile is India’s 5th largest trading partner in Latin America, which exports minerals worth $1.58 billion and imports automobiles and pharmaceuticals from India.

Peru has witnessed 60% year-on-year jump in its exports to India in FY 2024-25 to touch $4.98 billion, while India’s exports to its 3rd largest trading partner in Latin America grew 9% year-on-year to touch $1 billion.

India primarily exports two and three-wheelers, cotton yarn, pharmaceuticals, iron and steel products, plastics, rubber and pipes to Peru, and imports gold, copper, synthetic filaments, phosphates of calcium, and fish flour.

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