Prime Minister Narendra Modi visited two South American nations – Argentina and Brazil –as part of his ongoing five-nation tour to strengthen bilateral relations with a continent rich in natural resources such as oil, critical minerals, and agricultural products. Separately, India is negotiating trade agreements with Chile and Peru.
Modi’s visit to Argentina on July 5 was the first bilateral visit by an Indian Prime Minister to the country after a gap of 57 years. The fresh attempt to deepen bilateral relations with South America is aimed at enhancing According to senior government officials, India’s strategic positioning, expanding economic opportunities, and increasing its role on the global stage at a time when key trading partners such as the United States and the European Union pose barriers ranging from tariffs to carbon taxes.
Also, India’s plan to boost manufacturing of chips, semiconductors and cleantech products while decreasing its import reliance on China requires strategic partnerships with other nations for critical minerals.
Moneycontrol takes a look at the trade deals India is eyeing in South America:
Mercosur Preferential Trade Agreement (PTA)
In his meeting with President of Argentina, Javier Milei, PM Modi pushed for India’s long-standing demand to expand the scope of the Mercosur Preferential Trade Agreement. India is keen on improved access to agricultural products, such as soybeans, poultry, and sugar, from Mercosur countries. It also hopes to secure lower tariffs and preferential treatment in industrial goods, pharmaceuticals, and textiles, apart from broadening trade in services.
Mercosur is a South American trading bloc, with Argentina, Brazil, Uruguay, and Paraguay as its members. It is the fourth-largest integrated market or trade bloc globally, after the EU, the North American Free Trade Agreement (NAFTA) and the Association of Southeast Asian Nations (ASEAN).
India-Mercosur PTA was signed in January 2004, but came into effect from June 2009. Both sides had given tariff concessions ranging from 10 percent to 100 percent. India had given tariff concessions on 450 tariff lines, while the South American trade bloc had given concessions to 452 tariff lines. The main idea behind a PTA is to eliminate or remove tariffs, covering a limited number of goods and less comprehensive as compared to a free trade agreement.
The key products covered in the Indian offer list are meat and meat products, organic and inorganic chemicals, raw hides and skins, leather articles, wool, cotton yarn, among others. The product groups covered by Mercosur nations are food preparations, organic chemicals, pharmaceuticals, essential oils, plastics, rubber, machinery items, electrical machinery and equipment, among others.
Argentina for critical minerals, gas and defence
India and Argentina on July 5 decided to strengthen collaboration in critical minerals, shale gas, defence manufacturing, space, telemedicine, digital health solutions and information technology following talks between PM Modi and President Javier Milei in Buenos Aires.
“The Prime Minister’s visit to Argentina comes at a particularly significant time as Argentina is undertaking major economic reforms similar to those India went through in the past. India’s advancements in defence manufacturing, in the space sector, in new areas such as information technology and Digital Public Infrastructure (DPI) can offer valuable expertise, and we can share experiences with Argentina,” said P Kumaran, Secretary (East) in the Ministry of External Affairs. He added that India is willing to share its expertise in telemedicine and digital healthcare solutions as well.
Trade between India and Argentina peaked at $6.4 billion in 2022. Argentina is one of the primary suppliers of edible oils, especially soybean oil, to India. However, due to the severe drought in Argentina, compounded by the resulting scarcity of foreign exchange, India-Argentina bilateral trade faced significant challenges in 2023 and declined 39 percent to $3.9 billion. In 2024, with improved weather conditions and a much more stable economy under the new government, trade regained its momentum, rising by 33 percent to $5.2 billion. Indo-Argentine trade experienced a significant resurgence in bilateral trade and strategic cooperation during the first quarter of calendar year 2025, registering a growth of 53.9 percent, with total trade valued at $2.06 billion. India is ranked as Argentina's fourth-largest trading partner and export destination.
India-Brazil to sign MoUs on clean energy and counter-terrorism
PM Modi is scheduled to hold bilateral talks with Brazilian President Luiz Inácio Lula da Silva later in the day on July 7.
On July 6, India’s Ambassador to Brazil, Dinesh Bhatia, told reporters that the two sides are expected to sign four memoranda of understanding (MoUs). These include cooperation in renewable energy, counterterrorism, agricultural research between the Indian Council of Agricultural Research (ICAR) and Brazil’s Embrapa, and a pact on the exchange and mutual protection of confidential information.
In 2024-25, bilateral trade reached $12.2 billion, with Indian exports accounting for $6.77 billion and imports from Brazil at $5.43 billion. Major Indian exports include petroleum products, agrochemicals, pharmaceuticals and engineering goods. Brazilian exports to India primarily comprise crude oil, soya oil, gold, raw sugar and cotton.
Indian investments in Brazil are estimated at over $6 billion, while Brazilian investments in India are around $1 billion. Prominent Indian firms operating in Brazil include Tata Motors, Mahindra Tractors, Infosys, Wipro and Sun Pharma, among others. Brazilian companies such as Vale, Stefanini and WEG have a presence in India.
Comprehensive Economic Partnership Agreement with Chile
India and Chile are currently working on a Comprehensive Economic Partnership Agreement (CEPA), with the first round of talks concluding on May 30 after five days of intense negotiations across 17 thematic topics.
India and Chile aim to conclude their trade negotiations for the CEPA by 2026. This agreement would move beyond their existing PTA to encompass broader areas like digital services, investment, and critical minerals.
CEPA would include chapters such as trade in services, movement of natural persons, rules of origin, sanitary and phytosanitary measures, technical barriers to trade, customs procedures and trade facilitation, initial provisions and general definitions, core and institutional provisions, final provisions, transparency, dispute settlement, economic cooperation, MSMEs, women’s economic empowerment, critical and strategic minerals trade and sustainable development, global value chains, investment promotion and cooperation, and intellectual property rights.
The next round of negotiations is expected in July-August 2025 and will be preceded by intersessional discussions through virtual conferences to address outstanding issues in advance of the upcoming meeting, commerce ministry officials said.
India’s bilateral trade with Chile stood at $3.6 billion in 2024-25 as of February 2025. This is double the $1.8 billion of trade between the two countries in 2016-17, the earliest period for which data is available.
However, India maintains a trade deficit with Chile, with the deficit at around $2.5 billion in 2024-25.
Trade agreement with Peru
India is working on a trade agreement with Peru as well. Seven rounds of negotiations have already concluded, and the eighth one will be held in Peru in July-end, officials at the Ministry of Commerce said.
Peru is the third-largest trading partner of India in the Latin American & Caribbean (LAC) region. In the last two decades, the trade between India and Peru has increased from $66 million in 2003 to around $3.68 billion in 2023. The trade agreement under negotiations would play a pivotal role in future collaboration in various sectors, creating avenues for mutual benefit and advancement.
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