LatAm pivot
India must shed its protectionist mindset and trade more with resource-rich South America
That Modi's ongoing five-nation tour includes Argentina and Brazil isn't a trivia. These two key South American nations can be important fulcrums of a potential Indian pivot to the continent. While India-South America trade has been steadily growing, it's far below potential. This has much to do with our unambitious approach to the region. True, India has a preferential trade agreement (PTA) with MERCOSUR bloc that includes Brazil, Argentina, Uruguay, Paraguay and Bolivia. The idea was that the PTA would be gradually expanded and upgraded to a free trade agreement (FTA). However, progress has been really slow and India's exports to Latin America in FY2025 stood at just $15.17bn – less than 2% of the region's total imports.
But trade is back on the agenda during Modi's visits, and rightly so. While one still hopes that an India-US trade deal can be clinched, New Delhi must be prepared for all eventualities. And with Trump keen on using tariffs as a strategic weapon to achieve geopolitical goals – take the Lindsey Graham-proposed bill to hit countries buying Russian oil with 500% tariff – India must diversify its trade relations. South America is a natural resources powerhouse. With vast deposits of oil, gas, copper, lithium, rare earths etc it can power India's industrial growth, advance critical sectors like EV batteries, and bolster food security.
The key for GOI would be to expand its diplomatic bandwidth and take a courageous approach to trade. We must cast away the protectionist mindset and be ready to compete. That's the only way beneficial FTAs can be worked out. Vietnam, which recently worked out a trade deal with US, has been following precisely this strategy, having inked 20 FTAs, with 16 already implemented. China already has a huge presence in Latin America. So, the latter is looking for balance. This is the perfect time for India to step up.
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This piece appeared as an editorial opinion in the print edition of The Times of India.
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