How India Is Looking To Diversify Trade Through South America

India is stepping up its engagement with South America as it seeks to diversify trade and reduce dependence on a limited set of overseas markets.

Commerce Secretary Rajesh Agrawal is scheduled to visit the region from August 24 to 28, with Chile, Argentina and Brazil set to be key stops, as per a report by PTI.

The visit comes as India explores wider market access, stronger trade agreements and opportunities in areas such as critical minerals, while South American economies reportedly seek to reduce their dependence on China and the US.

Chile Trade Pact Nears Key Stage

Agrawal is reportedly expected to take stock of negotiations with Chile on upgrading the existing Preferential Trade Agreement (PTA) into a Comprehensive Economic Partnership Agreement (CEPA).

Four rounds of negotiations have been held, with the latest taking place in December 2025, as per PTI.

Talks are at an advanced stage, with market access and critical minerals among the issues that still need to be resolved. The proposed CEPA is also expected to cover digital services, investment promotion, MSMEs and broader economic cooperation.

"The new government in Chile is keen on the agreement. Both sides are looking to find solutions to the pending issues," an official was quoted as saying by PTI.

Chile is India's fifth-largest trading partner in the Latin American and Caribbean region. Bilateral trade rose 66.45% to $6.25 billion in 2025-26 from $3.75 billion a year earlier.

India Seeks Wider Mercosur Access

In Argentina and Brazil, the focus is expected to be on expanding India's PTA with Mercosur.

The bloc comprises Brazil, Argentina, Paraguay, Uruguay, and Bolivia. The existing India-Mercosur agreement, which took effect in 2009, has limited coverage of around 450 tariff lines.

Discussions are underway on the Terms of Reference (ToR) for beginning negotiations to expand the pact, as per a report by CNBC-TV18.

Mercosur represents more than 67% of South America's economic output, while the combined economy of South American countries is estimated at $4.38 trillion. The Mercosur economies account for around $2.94 trillion, the report said.

Trade with both Argentina and Brazil has also expanded. India-Argentina trade rose 25.5% to $5.96 billion in 2025-26, while India-Brazil trade increased 23.48% to $15 billion, as per PTI.

The figures underline the scale of the opportunity as India seeks to deepen commercial ties with a region that is becoming increasingly important to its trade diversification strategy.

India-Brazil Sugar Dispute

The India-Brazil sugar dispute at the World Trade Organisation (WTO) could also feature in the discussions.

Brazil has challenged India's domestic support for sugarcane producers and export-related measures, arguing that they violate WTO rules.

India has maintained that its support policies and export schemes are consistent with its WTO commitments and rights.