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India Agrees To Expand PTA with Chile

Sweetlin Brahmachary Writes: India-Chile bilateral relation has remained cordial and cooperative. Both the nations usually have common view points on most international issues.

Sweetlin Brahmachary Writes: Chile or the Republic of Chile as it is officially called is a small country situated in South America. It comprises the Pacific islands of Juan FernándezSalas y GómezDesventuradas, and Easter Island in Oceania. World Bank has regarded Chile as “a high income nation” since July 2013. In 2006, Chile was known to have the highest nominal GDP in Latin America. It holds the 7th position in terms of highest degree of “economic freedom”. Today, the Chilean economy is one of the most stable amongst other South American nations. India-Chile bilateral relation has remained cordial and cooperative. Both the nations usually have common view points on most international issues. The year 2009 was marked as 60th year of Indo-Chile bilateral relations. Both the nations had signed several agreements and Memorandum of Understanding (MoUs) in various fields like Preferential Trade Agreement (PTA), Sports, Antarctica, Agriculture, Education, Science & Technology and so on.

India and Chile had signed the Preferential Trade Agreement in March 2006. This had contributed immensely to the growth in bilateral trade of both the nations. The period between 2006-2007 marked a bilateral trade of US$ 2.3 billion. Around that time, Chile was India’s 51st export destination. Things changed after the PTA came into force. It registered a growth of 58.49 percent in the bilateral trade during 2014-2015. Chilean exports to India had grown steadily during the same period of time. Indian exports to Chile had grown gradually from 36.9 percent to 40.9 percent during the same time period. High value added Indian items such as motor cars (Tata Motors, Hyundai); commercial vehicles (Mahindra, TELCO); two-wheelers and bulk of pharmaceuticals have entered the Chilean market. Indian imports from Chile are mainly iodine, copper, fresh apples and molybdenum concentrates. The bilateral trade is mostly based in terms of commodities (almost 91percent). They mostly trade on goods and not services. Owing to this, even though there was a rise in trade initially, there was a decline later on. This led to the negotiations to widen the PTA as this would encourage bilateral trade in both goods as well as services. However, in 2015, India had raised concerns with respect to the “Rules Of Origin” (ROO) but it has been sorted out through talks. The Chilean ambassador further reassured when he said, “We want Chilean products to come to India and Indian products to reach our markets.” Under the expanded PTA- Chile has offered concessions to India under  the term ‘Margin Of Preference’ (MOP) between 30 percent-100 percent on 1798 tariff lines, as against India’s deal to give concessions to 1031 tariff lines with a MOP between 10 percent-100 percent. Indian exports are expected to increase by 86 percent  as they  will include both goods and services now. Sanitary and Phytosanitary Measures (SPM) and Technical Barriers to Trade (TBT) will be handled diplomatically, taking into consideration the interests of both the nations.

To conclude, Chile is a gateway to both Latin America and Asia Pacific. As in the recent times, the geopolitics of Asia Pacific is in the lime light , any kind of agreement with these nations will give a great boost to the Indian economy.  Thus, this will increase India’s trade opportunities and diversify its trade destinations. Lastly, all these will directly contribute towards the setting-up of an Indo-Chile strategic relationship, and help India to grow as a powerful nation.







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