India and Peru: Distance only makes our economic ties grow stronger
Summary
Peru’s investment environment, natural resources and trade links make it an ideal economic partner in South America. Its lithium deposits make it especially attractive in the context of India’s clean-tech ambitions.For an Indian, Peru is far away geographically, nestled as it is on the Pacific coast of South America, but also in terms of its presence in public discourse. Yet, its economic ties with India have grown rapidly, with trade having risen from $66 million in 2003-04 to $4 billion in 2023-24; and there is greater potential to be tapped.
Peru is regarded as one of Latin America’s most stable economies, primarily because of sound macro- economic policies and rich natural resources. The Organization of Economic Co-operation and Development has projected its GDP growth at 2.8% in 2025 and 2.6% in 2026.
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The Peruvian government is treading the path of fiscal prudence, which has had a salutary effect on growth. With inflation under control, Peru’s central bank is expected to keep lowering its policy rate. The government is keen to boost investment, cut red tape, promote small-business formalization and accelerate infrastructure growth.
South America’s third largest nation is geographically diverse—it has an arid coastal region, the Andes mountains and Amazonian forests. It is blessed with various natural resources, including the world’s largest silver reserves and considerable deposits of gold, copper, zinc and lead. Also, Peru is rich in molybdenum and lithium, which are critical for electric vehicles (EVs), solar energy and energy storage. Besides, the Amazon region is rich in oil, natural gas and forestry resources. On its coastline, Peru hosts a thriving agri-business sector that exports asparagus, blueberries, grapes, avocados and organic bananas.
Known for its openness to trade, Lima has signed 22 free trade and economic integration agreements and 26 bilateral investment treaties. It has trade partnerships with leading global economies such as the US, China and the EU. As a member of APEC and the Pacific Alliance, Peru enjoys seamless access to a wide array of global markets. This can help India in its ambition to deepen its economic footprint in Latin America.
Peru ranks as India’s third-largest trade partner in the Latin America and Caribbean region. India exports a range of goods to Peru, including automobiles, motorcycles, three-wheelers, polyester and cotton yarns, pharmaceuticals, rubber and machinery. Peru’s key exports to India comprise gold, copper, artificial fibres, grapes, fish flour and phosphates of calcium. We see several partnership opportunities between Indian and Peruvian companies. Ficci’s paper, ‘India-Peru Economic Relations,’ outlines areas that both countries must examine.
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Mining: This is the Peruvian economy’s cornerstone, contributing 8.5% to GDP and accounting for over 60% of total exports. Five Indian companies have already invested around $30 million in Peru’s mining sector, but there is scope for more. The lithium sector should be of particular interest. Peru is home to the Falchani mine, located on the Macusani plateau, which is recognized as the world’s sixth-largest hard rock lithium deposit, containing an estimated 9.5 million tonnes of lithium carbonate. To strengthen its position, Peru is building what is projected to be South America’s largest lithium refinery, scheduled to begin operations in 2027.
For India, whose lithium requirements are rising due to its ambitious EV roadmap and renewable energy targets, a partnership with Peru represents a critical step towards energy security and raw material source diversification.
Textiles and apparel: This is another promising area for collaboration. With an efficient value chain from raw materials to finished goods, combined with low labour costs and favourable tariff conditions, the country is emerging as an attractive destination for global investors in the clothing and footwear segments.
Infrastructure: The Peruvian government is transforming its infrastructure, with a focus on smart cities, digital infrastructure and urban mobility. Indian companies have significant experience in these areas and can explore expansion possibilities.
Technology and innovation: Peru’s technology sector is witnessing rapid growth, fuelled by increasing internet penetration and a surge in foreign direct investment. Indian IT giants like Tata Consultancy Services, Tech Mahindra and Infosys already have a presence in Peru. India’s strengths in fintech, ed-tech, health-tech and agri-tech can contribute to the digital transformation of Peru’s economy.
Defence collaboration: Like India, Peru is in the process of modernizing its defence sector. Indian companies, with their expertise and experience in defence manufacturing, could play a pivotal role in supporting Peru’s modernization efforts.
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New horizons: Our government has clearly underlined India’s growing interest in deepening economic ties not just with Peru, but all of Latin America. As bilateral trade expands and the two countries work towards a comprehensive free trade agreement, which is expected to be finalized this year, we see a plethora of unfolding opportunities.
With Peru’s open investment environment, abundant natural resources and strategic trade connections, the country is well-positioned to become a key partner in India’s global economic outreach.
The author is director general, FICCI.
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