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Indian firms should use Paraguay as launchpad for South America: MEA

Indian companies should consider Paraguay as a staging post and launchpad to expand their operations across South America, the Ministry of External Affairs (MEA) said on Monday, following talks between the visiting Paraguayan delegation led by President Santiago Peña Palacios and the Indian delegation led by Prime Minister Narendra Modi. The two countries also agreed to 'explore holding technical talks' on expanding the India–Mercosur Preferential Trade Agreement (PTA) to enhance market access and boost both bilateral and inter-regional trade. At the meeting, Peña told the Indian delegation that Paraguay is one of the most open economies in the Mercosur region and South America more broadly, and urged India to take advantage of this. While Paraguay has a small population of around 7 million, and therefore a relatively small domestic market, it is strategically located adjacent to much larger markets. Owing to its central position in South America, Paraguay could serve as a launchpad for Indian companies seeking access to the broader region, said Secretary (East) P Kumaran at a press briefing after the talks. The Southern Common Market—Mercosur, by its Spanish initials—is a regional bloc with six members: Argentina, Brazil, Paraguay, Uruguay, and Bolivia. Venezuela is currently suspended from the group. 'Our companies would be looking at Paraguay as a kind of staging post, and therefore as a force multiplier,' Kumaran said. Indian companies already present in Paraguay include United Phosphorus Limited, which operates an agrochemicals production facility; Praj Industries, which produces biofuels; Aditya Birla Group, which has a trading office; and Tata Group, Mahindra, Royal Enfield, and Bajaj, which have distributorships for their vehicles. Peña, who arrived in India on Monday morning for a three-day visit, will travel to Mumbai on Tuesday to meet top Indian business leaders and companies. India is looking to collaborate with Paraguay in sectors such as healthcare and pharmaceuticals, defence, infrastructure, agriculture, renewable energy, and mining. Kumaran noted that although there was no specific discussion on India's accession to the Inter-American Development Bank (IADB), 'it is an idea that is being discussed within the ministry'. On the India–Mercosur PTA, Kumaran said India has expressed 'serious interest in expanding the scope and reach in terms of the range of products that the PTA covers', but that building consensus among Mercosur's five full members is necessary. 'We are talking to all the partners in the Mercosur region. What we need to do is also to agree on the terms of reference for those discussions, and then take it forward,' he said. During his talks with the Prime Minister, Peña also highlighted that Paraguay produces enough food to feed 70 million people—ten times its own population—and is therefore a major food exporter. 'We do buy soybean oil from them, and they are also willing to work with us on any other agricultural products we wish to import or collaborate on,' Kumaran said. Paraguay is the only country in South America that maintains diplomatic relations with Taiwan, though it also maintains a trading relationship with China. However, its trade is highly concentrated, with imports mainly from China and Brazil, and exports mostly to Argentina and Brazil. Given that much of Paraguay's trade is with just three countries, there is a strong motivation to diversify trade to better manage risks. Kumaran said that India, as a large and growing economy, is a natural partner in this context. Peña said he viewed India as a major trade and investment partner. 'He invited Indian companies to invest in Paraguay and promised to facilitate such investments in an efficient manner,' Kumaran added. Earlier in the day, during delegation-level talks, Prime Minister Modi noted, 'You are visiting not just Delhi but also Mumbai, which shows your commitment to building stronger ties between the two countries.' Referring to the existing PTA with Mercosur, Modi said, 'We can work together to further expand it.'