Govt sources: India, Brazil-led trade bloc look to expand current PTA instead of full-fledged FTA

Government sources have told CNBC-TV18 that India is looking to expand its existing Preferential Trade Agreement (PTA) with the Brazil-led trade bloc MERCOSUR instead of a full-fledged Free Trade Agreement (FTA).Stating that the scope is being worked out for the expansion of the PTA from the current 450-odd tariff lines, sources added that a full-fledged FTA may take time due to the need for consensus-building among the five MERCOSUR partner countries. India has already had a Preferential Trade Agreement (PTA) with MERCOSUR since 2004, which comprises Brazil, Argentina, Paraguay, Uruguay, and Bolivia.Brazil’s ministerial delegation is currently in India and is in talks with several Indian ministers to deepen the bilateral trade partnership. Earlier this month, India held a formal Trade Monitoring Mechanism meeting with Brazil to discuss prospects for an increase in trade between the two countries. In August 2025, India held a virtual meeting with the MERCOSUR trading bloc to firm up a Standard Operating Procedure (SOP) and a feasibility study for a potential Free Trade Agreement (FTA).India is exploring multiple export destinations to cushion the impact of a slowdown in several developed economies and the recently announced tariffs by the United States. Earlier this year, Prime Minister Narendra Modi met the Presidents of Brazil, Argentina, and Paraguay.Stating that Latin American countries wanting to diversify their trade destinations see a big market in India, government sources had earlier pointed out that India faces less risk in opening markets for Latin American countries due to their lesser product range and volumes, which won’t harm the interests of India’s domestic industry. All options remain open for widening trade with the MERCOSUR bloc, from the possibility of an increase in tariff lines from the current 450 to 4,000 under the existing PTA, or a full-fledged FTA replete with clauses on mobility for skilled professionals as well as rules of origin to prevent third-country dumping or transshipment.MERCOSUR countries comprise over 67% of the total economic share of South American economies. The collective size of the economy of all South American countries is $4.38 trillion, of which the combined size of the MERCOSUR member countries’ economies is $2.94 trillion.Stating that internal discussions within the trading bloc are underway on the expansion of the PTA to an FTA, government sources pointed out that a wider FTA will allow access for Indian exporters to large markets in MERCOSUR member countries. An FTA is also expected to allow Indian exports to access newer markets in the Caribbean and Pacific regions, many of which use MERCOSUR countries as transshipment hubs.Also Read: Make the most of Diwali 2025 long weekend and rejuvenate at these escapes in North India

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