Diplomatist Magazine Diplomatist September 2019 | Page 13

SPECIAL REPORT
India’s relations
with Mercosur
A weak trade relationship
with great potential
BY Ignacio Bartesaghi*
I
ndia and Mercosur show very different economic
conditions. On one hand, the former has registered high
economic growth rates that have even been higher than
those rates in China (measured by the evolution of the Gross
Domestic Product, GDP).On the other hand, the latter has
shown more volatility and fluctuations as it has happened
with almost all Latin American countries. However, India
faces relevant challenges for its economic development such
as the infrastructure deficit, the literacy rate gap with other
Asian countries and the low GDP per capita.
Regarding trade policies, not only India but also Mercosur
are protectionist economies that apply a higher average trade
tariff than the world average (higher in Mercosur, 10%) and
a great variety of non-tariffs trade barriers.
Given these barriers to trade that both economies have
been applying, the trade costs are high and if a trade agreement
Figure 1- GDP growth rate India and Mercosur
Source: own elaboration based on World Bank.
Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 9 • September 2019, Noida • 13