India fast-tracks Chile trade deal as US tariff deadline looms

India and Chile have agreed to launch talks for a Comprehensive Economic Partnership Agreement (CEPA), aiming to deepen trade ties and expand cooperation into new areas such as digital services and critical minerals, the commerce and industry ministry said in a statement.

The terms of reference (ToR), signed by Chilean Ambassador Juan Angulo and India’s chief negotiator Vimal Anand, sets the agenda and framework for CEPA talks, expanding the scope beyond the existing preferential trade agreement (PTA) to cover areas such as digital trade, MSMEs, investment, and critical minerals, it said.

The first round of CEPA talks will take place in New Delhi in the last week of May, the commerce ministry said.

The move comes as India races to conclude key trade deals during a 90-day pause on the US’s 26% reciprocal tariff on Indian exports. Originally set to take effect from 9 April, the tariff was postponed by Washington on 10 April for 60 countries, including India. With the new deadline now in early July, New Delhi is fast-tracking negotiations to seal pending free trade agreements, as Mint had reported on 11 April.

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Trade history

India and Chile have maintained a growing strategic partnership over the years. A Framework Agreement on Economic Cooperation was first signed in January 2005, followed by a PTA in March 2006. The pact was expanded in September 2016 and came into effect on 16 May 2017. In April 2019, both sides agreed to further broaden the PTA, with three rounds of negotiations held between 2019 and 2021.

As previously reported by Mint on 16 April 2024, the government had planned to formalise the ToR for CEPA with the South American nation to deepen economic engagement.

Both sides have now reiterated their intent to unlock the full potential of bilateral trade and commercial ties. The CEPA, as recommended by the Joint Study Group under the 2005 framework, is expected to facilitate investment, increase exports, and generate employment in both countries, it said.

India’s exports to Chile stood at $1.15 billion in FY25, slightly down from $1.18 billion in the previous fiscal and $1.17 billion in FY23. Key export items include engineering goods, drugs and pharmaceuticals, yarn, ready-made garments, marine products, and leather goods.

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