paraguay
PARAGUAY
A GATEWAY FOR INDIA TO EXPLORE
BUSINESSES IN MERCOSUR
BY GUSTAVO ROJAS*
I
ndia and the South American Common Market (Mercosur)
seem to be re-launching their partnership in 2019. In
March, the Vice President of India Venkaiah Naidu visited
Paraguay. After the presidential elections in Paraguay and
Brazil, the authorities of Mercosur and India resumed the
trade talks in order to extend their tariff preferences agreement
in force since 2009.
Mercosur is India’s main trading partner in Latin America.
Trade fl ows between Mercosur and India grew 252 percent
since 2008, reaching a record level of US$ 14 billion in 2017.
The expansion of trade has been balanced, with no chronic
trade defi cits for any of the partners. Indian exports to Mercosur
are concentrated in chemical, plastic, pharmaceutical, steel,
automotive, textile and apparel sectors, while India imports
soybean oil, oil, sugar, mining and steel products from
Mercosur. Throughout these years, the importance of the
Indian market for Mercosur exports has grown. Today, India is
the sixth largest foreign market for Argentine and Paraguayan
exports, accounting for over 3 percent of its global exports.
India’s increasing purchasing power, growing middle class
and the new Indian Government’s market approach indicate
26 • PARAGUAY 2019
an important potential for strengthening trade and investment
fl ows with these countries.
Despite India and Mercosur having great potential
for productive complementarity; both partners have to
overcome several obstacles to achieve this. Currently, the
trade preferences agreement is limited, granting preferences
of no more than 20 percent of their value to 527 products
in the Indian market and 461 products in the Mercosur
market. Both trading partners aim to expand mutual market
concessions to around 2,500 products, along with a higher
level of liberalization of preferences. This objective is an
important initiative when world trade is losing its dynamism.
The Mercosur countries share the condition of having a
limited number of trade agreements concerning only trade
in goods with India. In many cases, the rules of origin of
these trade agreements no longer respond to the dynamic
reality of global value chains. Global value chains require
comprehensive rules that regulate trade in goods, services
and investments at the same time. A new agreement should
take into account this new reality.
At the same time, the potential future agreement