About Us India-MERCOSUR Relations

Embassy of India

Buenos Aires

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India - MERCOSUR Trade Agreement

MERCOSUR is a trading bloc which has six member countries of Latin America viz. Brazil, Argentina, Uruguay and Paraguay being the founding members, Venezuela joining Mercosur in 2012 and Bolivia´s incorporation being agreed to by all five members in July 2015.

2.         MERCOSUR was formed in 1991 with the objective of free movement of goods, services, capital and people and it became a customs union in January 1995. It is now pursuing the third stage of its integration ‘Common Market’. 
Intra-Mercosur trade is duty-free while there is Common External Tariff (CET) for imports from other countries. Although the average CET is 14% it could range from 0 to 20%. CET has 800 exceptions including cars and sugar.

3.         MERCOSUR has become a successful regional market of more than 290 million people with a GDP of more than two trillion US dollars. It is the fourth largest integrated market after EU, NAFTA and ASEAN. Its biggest trading partner is the European Union. An important provision of the MERCOSUR charter, which is being debated considerably presently is that the member countries are forbidden to sign any free trade bilateral agreements with nonmember countries without the consensus of all the members.

4.         It has negotiated only one FTA since its inception, with Israel and closer trade ties with China are seen as a quick fix to high tariffs and noncompetitive industry. Its members also played a key role in the failure of the US-initiated Free Trade Agreement of the Americas (FTAA), which was meant to unite Latin America and North America in one broad trade accord.

5.         Its integration project envisages coordination of macro economic policies, common currency, MERCOSUR Bank, common citizenship and cooperation in development of infrastructure culture and education. MERCOSUR countries have an Air Services Agreement under which airlines of member countries can fly into the international airports of the region freely. The region is binding itself with a growing network of cross-border roads, electricity grids, gas pipelines and other infrastructural linkages. 

6.         The Secretariat of MERCOSUR is located at Montevideo in Uruguay. But it does not have supranational powers like the EU Secretariat in Brussels.
The Presidency of MERCOSUR rotates between member states every six months marked by summit meetings. The MERCOSUR countries have agreed to use their own currencies for intra-Mercosur trade instead of using US dollars. A beginning has been made between Argentina and Brazil. 

India-MERCOSUR Preferential Trade Agreement

7.         The negotiations on the Preferential Trade Agreement (PTA) were concluded in March 2005 and the agreement has become operational since June 2009. The India-MERCOSUR PTA provides for five Annexes or important features:

·         Annex I to the PTA - Offer List of MERCOSUR for tariff concession on Indian products in MERCOSUR. It contains 452 products.

·         Annex II to the PTA - Offer List of India for tariff concession on MERCOSUR’s products in India. It contains 450 products.

·         Annex III to the PTA - Rules of Origin

·         Annex IV to the PTA - Safeguard Measures

·         Annex V to the PTA - Dispute Settlement Procedure (DSP)

8.         Preferential duty (10-20 % in most cases) is given to 450 Indian products entering MERCOSUR and reciprocal concession to 450 products of MERCOSUR entering India. Duty discounts offered for 452 Indian exports are:

·         For 394 products: 10%

·         For 45 products: 20 %

·         For 13 products: 100%.

Duty discounts offered on 450 MERCOSUR exports:

·         For 93 products: 10%

·         For 336 products: 20%

·         For 21 products: 100%.

9.         India’s trade with MERCOSUR for 2013 was 15.2 billion US dollars accounting for 60% of India’s total trade with Latin America. India’s imports mainly included crude oil from Venezuela and soya from the region.

10.       The major products covered in Indian offer list are meat and meat products, organic & inorganic chemicals, dyes & pigments, raw hides and skins, leather articles, wool, cotton yarn, glass and glassware, articles of iron and steel, machinery items, electrical machinery and equipments, optical, photographic & cinematographic apparatus

11.       The major product groups covered in the offer list of MERCOSUR are food preparations, organic chemicals, pharmaceuticals, essential oils, plastics & articles, rubber and rubber products, tools and implements, machinery items, electrical machinery and equipments.

Expansion of India- MERCOSUR PTA

12.       India and MERCOSUR have been in talks for expanding the current list of 450 products, that enjoy low or no tariff benefits, to 1500-2000.

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November 2018