India is moving swiftly to finalise new trade agreements with Latin American nations, notably Peru, Chile, and Mexico, as escalating U.S. tariffs strain its export-dependent sectors.

The recent tariff measures imposed by President Donald Trump’s administration have disrupted access to the American market, prompting New Delhi to recalibrate its trade strategy.

The focus is not just on offsetting immediate losses but on achieving deeper structural resilience against external economic pressures.

Negotiations with Peru and Chile have reached an advanced stage, with both sides aiming to close talks within months. These agreements are expected to cover goods, services, and investment flows, offering Indian exporters preferential access to high-value markets in South America.

For Peru, which supplies copper, zinc, and silver, India’s fast-growing industrial demand offers reciprocal benefits. In return, India seeks to expand its footprint in pharmaceuticals, engineering goods, and textiles, which have shown considerable growth potential in the Andean region.

Chile remains a crucial partner due to its stable economy and rich reserves of lithium and copper — minerals that are vital for India’s green energy and battery manufacturing goals.

A renewed FTA with Chile, building on the 2017 Preferential Trade Agreement, could allow deeper tariff reductions on nearly 90 percent of traded goods. This would help India secure critical mineral supply chains and reduce its dependence on traditional partners such as China and Australia.

The inclusion of Mexico in the list of target nations underlines India’s broader strategic intent. Mexico’s industrial capacity and proximity to the U.S. market make it a natural node for Indian manufacturers seeking to hedge tariff risk.

By engaging Mexico, India aims to integrate more fully into North and Latin American value chains, which are being reshaped under new U.S. trade policies. Such partnerships also extend India’s geopolitical reach, creating south-south linkages that complement its growing role in the Global South.

Indian policymakers view Latin America as a long-term trade and investment frontier. The region’s combined GDP exceeds 5 trillion dollars, and its demand for affordable pharmaceuticals, processed food, and affordable engineering goods matches India’s export strengths.

Although logistics costs remain a challenge, the ongoing push to develop direct shipping routes and banking facilities is expected to lower trade friction over time.

In parallel, India is intensifying cooperation with CELAC (Community of Latin American and Caribbean States) to forge a collective framework that supports diversified supply chains. The emphasis is on technology transfer, digital cooperation, and sustainable agriculture, areas where both sides can benefit from mutual expertise.

The government’s proactive outreach underlines its intent to ensure that India does not remain overexposed to Western markets or protectionist policy shocks.

Analysts believe that if the FTAs with Peru and Chile are signed by early 2026, they could together re-channel nearly 20 percent of exports that were originally bound for the United States.

This would not only stabilise India’s external trade balance but also reinforce its position as a reliable partner for the Latin American bloc. The policy signals a structural realignment of India’s trade diplomacy — from dependency to diversification — driven by both necessity and opportunity.

Based On MINT Video Report