India and the South American trade bloc MERCOSUR have formally announced the commencement of negotiations to expand their existing trade agreement.

The Commerce Ministry confirmed the development on Monday, highlighting New Delhi’s continued efforts to diversify export markets and strengthen commercial ties amid global economic volatility.

The current pact, which has been in force since June 2009, provides India tariff concessions across 450 product categories, while MERCOSUR offers reductions on 452 lines. Bilateral trade between India and the grouping reached $21 billion in 2025, equivalent to approximately ₹1,75,000 crores. This figure underscores the growing importance of South America in India’s trade strategy.

Commerce and Industry Minister Piyush Goyal and Uruguay’s Minister of Foreign Affairs Mario Lubetkin jointly declared the launch of negotiations. According to the Commerce Ministry, both sides are finalising the terms of reference, which will define the scope and structure of the expanded agreement. MERCOSUR currently comprises Brazil, Argentina, Bolivia, Uruguay, and Paraguay, making it one of the most significant regional trade blocs in Latin America.

The announcement comes at a time when India is actively seeking to broaden its shipment portfolio. With India’s robust growth outlook standing out amid international uncertainty, countries and trading coalitions are increasingly keen to deepen economic cooperation with New Delhi. The move reflects India’s strategic intent to reduce reliance on traditional markets and secure new opportunities in emerging regions.

In addition to the negotiations, India and MERCOSUR signed a protocol on Monday aimed at streamlining paperless commerce and modernising customs procedures. The Commerce Ministry explained that the initiative would facilitate the transition towards digital and paperless trade documentation, reduce transaction costs, and cut processing time associated with the issuance and verification of Certificates of Origin. This step is expected to enhance the efficiency of preferential trade under the existing India-MERCOSUR Preferential Trade Agreement (PTA).

The protocol builds on discussions within the Joint Administrative Committee of the India-MERCOSUR PTA. During a session in November last year, both delegations supported updating the pact to permit digital certificates of origin. This proposal was subsequently endorsed during the fifth Joint Administrative Committee meeting held on April 9, paving the way for Monday’s formal agreement.

India’s engagement with MERCOSUR is part of a wider strategy to strengthen South-South cooperation and expand its footprint in Latin America. The region offers significant opportunities in sectors such as agriculture, energy, and minerals, which align with India’s long-term economic priorities.

The expanded trade pact is expected to cover a broader range of goods and services, potentially opening new avenues for Indian exporters in pharmaceuticals, engineering products, and IT services.

The negotiations also reflect MERCOSUR’s interest in tapping into India’s fast-growing market. With India projected to remain the world’s fastest-growing major economy, the bloc sees expanded trade ties as a way to diversify its own export destinations and reduce dependence on traditional partners such as China and the United States.

The combination of tariff expansion and digital trade facilitation is likely to mark a new phase in India-MERCOSUR relations. Both sides are expected to push for a balanced agreement that delivers reciprocal benefits, while also addressing modern trade challenges such as supply chain resilience and digital integration.

ANI