India and Chile Sign Terms of Reference to Launch Free Trade Agreement

India continues to deepen its global trade engagements by formalising the Terms of Reference for a free trade agreement with Chile. As per official statements, the upcoming Comprehensive Economic Partnership Agreement (CEPA) will build upon the existing Preferential Trade Agreement (PTA) and aims to strengthen economic ties across various key sectors. The agreement signals India's broader strategy to use trade expansion as a lever for long-term economic growth.

From Preferential Trade to Comprehensive Partnership

India and Chile have shared a Preferential Trade Agreement since 2006, which was expanded in 2016 to cover 1,000 tariff lines. Between 2019 and 2021, three rounds of negotiations took place to further broaden the pact. The newly signed Terms of Reference now lay the foundation for a more expansive CEPA, with the first round of negotiations scheduled to take place in New Delhi from May 26–30, 2025.

According to a government statement, the CEPA will place particular focus on digital services, investment promotion and cooperation, MSMEs, and critical minerals. This broader agenda seeks to modernise the trade framework between the two nations and explore areas of mutual strategic interest.

Strategic Vision and Sectoral Collaboration

Chilean President Gabriel Boric Font’s visit to India in April set the tone for renewed bilateral enthusiasm. During his meeting with Prime Minister Narendra Modi, both leaders jointly announced the resumption of trade deal negotiations. Modi highlighted Chile’s strategic importance, referring to it as a "gateway to Antarctica" and identifying key areas of collaboration, including critical minerals, agriculture, digital public infrastructure, railways, and space.

At the 10th CII India–Latin America Caribbean Conclave held in March, Union Commerce Minister Piyush Goyal emphasised the need for faster decision-making in trade negotiations. “Agreements that are long drawn, negotiated over 10–20 rounds, can never get fructified into solid partnerships,” he stated. While India currently maintains a $45 billion trade relationship with Latin America, Goyal expressed ambition to raise trade volumes to $100–$200 billion, citing opportunities in services, tourism, horticulture, critical minerals, and gems and jewellery.

Read More: India-UK FTA Provides UK Firms Access to £38 Billion Central Govt Procurement Market

Conclusion

The India–Chile CEPA signifies a promising evolution in bilateral trade, reflecting India’s strategic focus on Latin America as a trade partner. With negotiations set to begin soon, the agreement could pave the way for diversified cooperation and enhanced economic engagement between the two nations.
 

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