India and Chile have entered into another milestone in their trade relations as an agreement on the expansion of India-Chile PTA which was signed on 6th September 2016 is finally being implemented. The Union Cabinet had approved the expansion of PTA in April 2016.

The expanded PTA would immensely benefit both sides as a wide array of concessions has been offered by both sides on a number of tariff lines which will facilitate more two-way trade.

Background | India-Chile PTA

  • India and Chile had earlier signed a Preferential Trade Agreement (PTA) on March 8, 2006, which came into force with effect from August 2007.
  • The original PTA had a limited number of tariff lines wherein both sides had extended tariff concessions to each other. India’s offer list to Chile consisted of only 178 tariff lines whereas Chile’s offer list to India contained 296 tariff lines at the 8-digit level.

Highlights | India-Chile PTA

  • The expanded PTA has a wider coverage wherein Chile has offered concessions to India on 1798 tariff lines with Margin of Preference (MoP) ranging from 30%-100% and India has offered concessions to Chile on 1031 tariff lines at 8-digit level with MoP ranging from 10%-100%.
  • This would facilitate exporters of both sides to take the advantage of tariff concessions as per the expanded PTA immediately which covers around 96% of bilateral trade.

India-Chile trade | India-Chile PTA

  • Chile is the fourth largest trading partner of India in LAC region after Brazil, Venezuela, and Argentina.
  • India’s bilateral trade has grown substantially to reach a level of US$ 3,646.45 million during 2014-15 as compared to US$ 2,655.35 million in 2011-12 as per the Department of Commerce statistics.
  • However, during the year 2015-16, bilateral trade declined by (-) 27.60% and stood at US$ 2,639.99 million with exports US$ 679.32 million and imports US$ 1,960.67 million.
  • The decline in bilateral trade was due to extraneous reasons such as fall in prices of crude oil and international commodities.
  • During the last few years, bilateral trade has been in favor of Chile because of import of high volume of copper ore which constitutes more than 88% of the imports from Chile.
  • India’s exports to Chile are diverse which consist of transport equipment, drugs and pharmaceuticals, yarn of polyester fibres, tyres and tubes, manufacture of metals, articles of apparel, organic/inorganic and agrochemicals, textiles, readymade garments, plastic goods, leather products, engineering goods, imitation jewellery, sports goods and handicrafts. Major items of Import from Chile are copper ore and concentrates, iodine, copper anodes, copper cathodes, molybdenum ores & concentrates, lithium carbonates & oxide, metal scrap, inorganic chemicals, pulp & waste paper, fruits & nuts excluding cashews, fertilizers, and machinery.

Conclusion | India-Chile PTA

Keeping in view that Chile is the founding member of the Pacific Alliance to which India is an Observer Member, implementing the expanded PTA could deepen its engagement with the emerging trade bloc. 

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